Blogs about the domain industry and the various players and companies within it.

The Cult of Personality

The Cult of Personality

In every industry there are people that we all can be tempted to aspire to be like. I’ve watched some domainers desperately believe that if they follow an industry celebrity then they will achieve the same level of success. Sadly, they get swayed by a personality and completely ignore the results.

When you’re at a conference it’s really easy to get caught up in all the hype and you can fool yourself into believing that everyone is much more successful than you. Let me say from the outset that the great majority of numbers that you hear can be divide by at least three. So don’t panic and just keep your eye on your own key business metrics.

Escrow.com

When you get home from a conference and sit there alone wondering how you’re going to pay your domain renewals, the parties and personalities seem to become a distant memory. All that counts is the bottom line.

So don’t be swayed by the personalities…..dig into your own numbers. It takes a lot of work and skill to understand what is actually going on with a domain portfolio so that you can make sound business decisions rather than an emotional ones.

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Good Players - Jothan Frakes

Good Players - Jothan Frakes

I’ve been asked a number of times about who are the really good players in the domain industry. I thought that from time to time that I would highlight these individuals that quietly go about their business. They are people that are generous with their time, are absolutely trustworthy and great fun to be around…..in essence they are the heart and soul of what it means to be a domainer.

Escrow.com

Jothan Frakes

I first met Jothan many years ago at a TRAFFIC conference and we talked into the small hours of the morning about the domain industry. During this time I gained an enormous amount of respect for him as one of the most knowledgeable people in the industry.

Our relationship really cemented at the TRAFFIC Downunder conference when he was part of a group of domainers that flew light aircraft back from the Gold Coast in Queensland to Melbourne. I was one of the pilots and it was a great time getting to know Jothan on both a professional and personal level.

Jothan has played many diverse roles in the domain industry but it is clear that he has a real gift for running exceptional conferences. From founding the successful Domain Roundtable conferences in 2006-7, to being intimately involved with DomainFest while it was with Domain Sponsor and now with the largest industry gathering, NamesCon. Jothan has developed a unique gift for conference formats, topics and promotions. Even now he is launching a series of regional conferences under the DomainFest banner – information on the next one can be viewed at doaminfest.asia.

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Critical Insights Into the Domain Industry – Part 5

Critical Insights Into the Domain Industry – Part 5

Check out the previous articles in this series on the domain name industry.

We now need to leap forward in time to 2014 when the first new gTLDs were launched. What does this mean for domain investors that has adopted a sales model? How will the price of .com domains be impacted by the new gTLDs?

I personally believe that the prices that .com domains receive for the stock-turn-model of selling domains will be maintained as the demand from the renewed interest in domains offsets the effects of a massive oversupply. As time goes by and the new gTLDs become more mainstream the prices of the .com domains and all other extensions will fall. If you’re a cash constrained small business why spend $1500 on a domain name when you can pick up something very similar for $10?

Escrow.com

This would suggest that if you have adopted this business model for your .com domains then brace yourself for a decline in sales prices. I should say that this excludes the top-shelf single-word generics.

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Critical Insights Into the Domain Industry – Part 4

Critical Insights Into the Domain Industry – Part 4

This is the fourth part in the series on the Domain Industry and it continues directly on from the previously three. Even with the decline in traffic revenues they have continued to underpin the entire domain industry since its inception. Everyone from the registry through to the parking company are dependent upon this steady relatively consistent stream of cash.

The one bright spot during this time was that domain investors began to set more realistic prices on their assets. This drastically improved the problem of domain liquidity and injected more funds into the industry.

Before the industry downturn domain investors honestly believed that every domain they owned was almost priceless….they were waiting for that magical pot of gold to appear at the end of their domaining rainbow. I remember one prominent investor publicly declaring that he automatically turned down all offers less than $200K!

Escrow.com

With the squeeze on returns really biting, investors were now looking for another business model to help them out. This was the birth of the stock-turn model of selling domains.

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Critical Insights Into the Domain Industry - Part 3

Critical Insights Into the Domain Industry - Part 3

I remember speaking at TRAFFIC Vegas 2008 and I put up the below graph on the projector. I indicated that the industry was in a mini-bubble with domains at hugely inflated prices. I had a large number of people come to me after my session and tell me that I was nuts. Was I wrong?

I believed that we were at point A in the chart and the mini-bubble was in full swing. So why did I stand up and pour call water over the partying atmosphere? To understand what I was seeing we need to understand the industry at that time. This is the state of the industry back in 2008:

  1. Market valuation were being underpinned by a few select domainers – no market depth.
  2. Domain investors were massively reinvesting their parking revenues
  3. Debt has entered the market.
  4. Flurry of new small investors hoping they weren’t too late.
  5. Lack of domain liquidity

Escrow.com

Anyone of these factors alone would inflate prices but combined, they created a massive bubble. Domains with little to no value went for crazy prices and traffic domains sold for insane multiples. The euphoria was like a contagion that was eating away at the heart of the industry as it danced to some strange beat. More and more people wanted to join the celebration as if there would be no end.

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Critical Insights Into the Domain Industry - Part 2

Critical Insights Into the Domain Industry - Part 2

This article continues directly from Part 1 in the series "Critical Insights Into the Domain Industry"

Google’s response to the aggregation of traffic by parking companies was to instantly grant a number of additional domain feeds to new parking companies. Some of these feeds had a honeymoon clause that allowed them to have a competitive advantage versus the larger incumbents. Many domain investors flocked to these new companies as they were seen as their salvation to paying renewal fees. This instantly re-fragmented the marketplace.

Escrow.com

Now that the market was split up again, Google instituted DRID’s (Domain Registrant ID) to reduce fraud (this was a good move IMHO) and CAF (Custom Ad Frame). CAF is where Google controls everything on the lander for a parked page.

Personally, I think that this overall strategy was a really clever part on Google. It allowed them to decrease PPC rates and completely control the entire domain channel without the threat of a wounded Yahoo stepping up to the plate. Some people get really upset by Google’s behaviour. What domain investors need to understand is that Google is obligated to behave in such a fashion on behalf of their shareholders.

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Critical Insights Into the Domain Industry - Part 1

Critical Insights Into the Domain Industry - Part 1

I’ve spoken and attended a lot of conferences over the years….and clocked up quite a few airline miles in the process! During this time I’ve seen so many people come and go, businesses launched only to vanish and domain investments completely mismanaged.

So why am I reflecting on these things? I was speaking with a client this morning and the conversation caused me to journey down memory lane and review a few of my old presentations that I’ve shared at conferences.

Escrow.com

I had a bit of a laugh when I looked at a presentation that I did at TRAFFIC Vegas 2008. One of the slides predicted the recession and the collapse of domain valuations and PPC revenue. Guess what….it happened.

Am I a living genius? My wife would be the first to say, not at all! What I try and do is take in what is happening in the complete industry and then ask the reason “Why?” This is quickly followed up by, “So what does this mean?”

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Brandon and Matt Discuss the Escrow/Freelancer Deal

Brandon and Matt Discuss the Escrow/Freelancer Deal

A few days ago I wrote an article on the acquisition of Escrow.com by Freelancer.com. This morning, I had an opportunity to speak with both Brandon Abbey from Escrow.com and Matt Barrie, the CEO of Freelancer.com about the why the deal was good for both companies.

Although he is an Australian, Matt completed his Masters in Electrical Engineering at Stanford 1998. It was during this time that he found himself immersed in the burgeoning technology boom. Matt said, “I remember using Google because it happened to be on one of the universities servers and it seemed pretty cool at the time.”

Escrow

His Stanford background helped provide him with a unique insight into what makes tech companies really flourish. “It’s all about providing a superior customer result,” he said.

For the last 11 years Freelancer has been acquiring companies (over 19 to date) within the crowdsourcing and freelancing marketplace. Since listing on the Australian stock exchange at the end of 2013 Freelancer.com now has a market cap of more than $460 million.

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Freelancer.com Acquires Escrow.com

Freelancer.com Acquires Escrow.com

In breaking news, Australian company, Freelancer.com has reached an agreement to acquire Escrow.com for $7.5m in cash. Freelancer.com is the world’s largest freelancing and crowdsourcing marketplace by number of users and projects.

For many years, Escrow.com has been the company of choice used by many domain investors for their sales and acquisitions. Escrow also partners with eBay, GoDaddy, AutoTrader.com and Flippa.com and has a strategic partnership with the U.S. Commercial Service (USCS) in support of President Obama’s National Export Initiative designed to significantly grow US export volume.

Escrow.com

Since Escrow.com has been a private company this is the first time that we’ve had a glimpse into the financials driving the business. As can be seen from the chart below, Escrow.com has experienced continued growth even in the downturn years of 2012 and 2013. According to the press release announcement, for the FY14, Escrow.com has facilitated a gross payment volume of US$265 million, net revenue of just over US$5 million, US$1.2 million in EBITDA.

Escrow.com Revenue

What's really interesting is where all the revenue is coming from and the fact that  only 41% is coming solely from the US market. This really shows that the Escrow.com team is viewing the world as their marketplace rather than just the USA.

Revenue sources

Given the $7.5 million price tag this means that Freelancer is paying at least a multiple of 6.25. This seems reasonable given the strength, sustainability and market position of the Escrow.com business.

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Moving Forward in 2015


In 2015 the domain industry was launched with Namescon but there's a lot more on it's way. Domaining Europe, ICANN conferences and The Domain Conference being run by Howard, Barbara and Ray Neu are just a few of the topics discussed on this video.

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