Saturday Musings - The Bucket Theory

I often find myself talking to my own kids about buckets. These aren’t the regular buckets that you carry water around in but relate more to the short, medium and long-term plans for your life. Over the years, I’ve found that having buckets has been really advantageous in understanding my own direction in life.

Items in the short-term bucket are things such as earning money to put food on the table and a roof over your head. Without this bucket being constantly topped up then you’ll find it a lot harder to get through life.

The medium-term bucket is sub-five years. It has things such as education, training and gaining experience in it. This bucket is all about investing in yourself so that you can become better at whatever you do.

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Then there’s the long-term bucket. This covers who you are and why you do the things that you do. In this bucket are items such as character building, relationships, guiding life principles and typically spiritually related issues. There’s only two things that are certain in this world, death and taxes.. This is the bucket that is all about what you would like people to say about you when you die.

Many people get stuck in the short-term bucket believing that if they can just earn more money then all of their problems will vanish. I’ve met a number of these individuals and they’ve climbed the ladder of success to find that it’s leaning against the wrong wall. They are very wealthy, have no close friends, disaster of a family and are often very shallow.

Those people that only focus on the medium-term end up starving and having bad relationships. These sort of people are often amazingly smart but incredibly unwise.

I could summarise the “long-termer” in one sentence….They’re so heavenly minded that they’re often no earthly good.” In other words, the people that focus entirely on this bucket believe that it’s a waste of time working to pay the bills and it never occurs to them that skills are worthwhile.

So back to my kids. I counsel them to work a little at all three buckets. There will be times in their life that they may have a focus (eg. Studying) but to never completely neglect any single bucket. They need to live now, develop skills and never forget that character is vitally important.

For example, this week my daughter had a flat tyre. She had no idea what to do so I went out and put the spare tyre on and discovered that it was also flat. In the process I found that the tyres weren’t just flat, she was driving on the metal belts on the inside edge.....not good!

She had to go out that night (urgent friend business) and said that she would just drive the car on the flat tyre. This caused me to relieve her of the car key. This then meant that Dad was the worst enemy in the world at which point I asked her why she was getting so angry at the person that was about to help her.

So here was her problem. The short-term bucket didn’t have any cash in it to fix the tyres, the medium bucket didn’t know what to do with the situation and the long-term bucket of our relationship was taking a beating.

The next day she took a bus to her part-time job (Dad still had the car key) and unbeknown to her I started solving the problem. I managed to get the car to a tyre workshop (that’s a long story) and had three of them replaced plus a general check-up. It was no longer a death machine...which is always good!

When she returned home she was so happy that her car was up and going (short-term). I then took her through (again) some basic car maintenance (tyres, brakes and steering) to help improve her skills (medium-term) and to point out the disaster that driving on a flat tyre could be. We then had a talk about our relationship and that working on the problem is far better than yelling (long-term).

Later that night, this is what she posted on Facebook:

I would just like to take a moment to acknowledge how amazing my father is! I found out my car was more like death on wheels yesterday. And while I was at work today (I took the bus) my dad took my car to a mechanics and got 3 brand new tires and a wheel alignment done for me. Thank you to the best daddy in the world! Even when I yell and scream at you, you always amaze me with how selfless and thoughtful you are xx

This story wasn’t to show how great a Dad I am….trust me when I say that all Dad’s struggle. It does illustrate that working on the different buckets is so important. If I had left my daughters car broken and tried to mend our relationship then my guess is that I wouldn’t have received the above post. After all, what’s the point in talking to a starving man about their character? Give them a meal first dummy!

I find the buckets can be used in many different areas of my life and help me approach problems by considering the implications of the short, medium and long-term. I hope that you find this blog interesting and even share a few of your own experiences. Have a great weekend!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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Personal Musings - Get Off Your Backside!

I was talking to a young man the other day and I told him that if I wanted anything done then he would be the last person that I’d ask. He was a bit taken aback by the comment and asked me why.

I looked him in the eye and said, “Because you’re not busy.”

There’s an age old adage that says, “If you want something done then give it to a busy person.” The reason for this is that busy people put the item on their list and get it done while lazy people will get around to it one day.

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For example, the young man I was speaking to crawls out of bed around 11am each day, works at a local fast food place for maybe 20 hours per week and honestly believes that he’s working really hard. So what does he do with the rest of his time? Television, hanging out with friends and games are all high on the agenda.

I told him to get some pride in himself and to at least pay his parents some money for board each week. It’s fair to say that this didn’t go down too well.

For some stupid reason the current generation seems to think that everything should be served up to them on a platter and that the world owes them everything. The job of parents is to provide for their every need and their job is to expect that this will be done. I hate to rain on their parade but this isn’t the state of the real world.

In the conversation I discovered that he had some notion about starting his own business (he’d dropped out of university). The biggest problem was that he couldn’t come up with any ideas. So I rattled off about a dozen ideas that he could do immediately…that was a big mistake. He then told me that he would have to really think about which idea to go with. It was clear that I’d given him too many to cope with…..darn it!

Contrast this young man with a young girl I know. She’s studying to gain a qualification in an industry that she’s passionate about. In the time when she’s not studying she’s working at a part-time job so that she can be self-reliant. Although she’s half-way through her course she’s already applying for jobs and letting companies in her industry know that she will be available later in the year. Everyday she’s up at 8am and in bed by 10pm….she’s a girl on a mission!

As an employer, which of these two people would I employ? It doesn’t take rocket science to work out that the girl is by far the better candidate. You can build a business around a person with her kind of attitude.

So what do I need to do? Probably the first thing is to stop generalising about the current generation….there’s quite a number of them that, like the girl, have incredible drive. I find myself constantly looking for motivated young people as I find that they inspire me and often provide a fresh perspective on life.

I would encourage you to take a 20 year old nephew or niece out for coffee and ask them questions about life. You may suddenly gain a fresh understanding on the current generation…..or you may end up giving them a kick up the seat of the pants. Whatever happens, I'm sure that it will be an interesting experience!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

 

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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

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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.

I’ll never forget seeing a domain magazine enter the market (remember we are niche) and then a second magazine appeared! This is when I personally sold the vast majority of my own domain portfolio….the writing was on the wall. I was out! I took the money, spent 6 months traveling, got my pilot’s license and paid for the kid’s school fees. Life was very good.

Since that time there’s been a lot of blood in the water as domain investors that had raised debt/equity capital discovered they were in a new world - point B. The Global Financial Crisis (GFC) was the icing on the cake and Google, correctly put the squeeze on payouts….don’t forget they have shareholders in a turbulent financial market.

When seeing the GFC storm first hit I read a domain blog suggesting that it was great to be in the domain industry and not be subject to the financial winds. I immediately wrote an article saying that if you believed the writer then you were living in a fool’s paradise.

Let’s think about the GFC and the factors above. Market makers left as they battened down the hatches of their own financial situations, parking revenues declined courtesy of Google, debt financing dried up and new investors vanished. I’ll deal with the final factor in my next article…so let’s hang onto that one.

During this time I know of quite a number of companies that have either had to tell investors that their ROI will now be over a much longer time frame and some even had to liquidate assets to crystalise losses. Many of those individuals that raised debt have found themselves selling their house or have gone into bankruptcy. This is a sorry tale but one that has been a nightmare reality for some.

It has been really difficult for these individuals as they were like shooting stars that shot across the sky in a blaze of glory just to burn up. Most are no longer in the industry, some stole from other domainers, others suffered massive personal problems as the financial pressures came to bear and quite a number ended up with serious health problems due to stress.

I remember calling up one such person to see what I could do to help them out. They sounded like a shadow of their former self. My advice to anyone that has gone through financial hardship is to get help sooner rather than later. For the rest of us that have survived those years….we need to thank God that we’re still here!

I say to my kids that the cheapest way to education is to learn from other people's mistakes. Our industry needs to learn from those turbulent times and learn both the good and the bad from those people that blazed across the sky. We also need to learn from those people that are still around and remember those times....there are still quite a number around.

One of the things I love doing at conferences is getting together with this group of domainers and discussing what kept their heads in the game during those years and what they're doing now. They typically don't make a big show about what they are doing but nevertheless they are inspirational individuals and are ALL in my "Hall of Fame".

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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whizzbang
I agree, Thank God we made it this far. Quite a journey full of experiences and hardship. Maybe the ones no longer here weren't me... Read More
05 June 2015
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Personal Musings - Where are the Leaders?

Recently, I’ve been getting increasingly frustrated! It’s a state that I periodically go through as I wrestle with what’s happening in my life. So in the end, I packed my bag, kissed my wife good-bye and headed off into the country for a night and a time to get my head in the right place. No, I wasn’t leaving home….I was just needing to get a fresh sense of vision.

So what was frustrating me? Everything! You turn on the television and it pumps out endless amounts of problems; terrorism, race riots, wars, virus break-outs, droughts, floods, earthquakes…..and the list goes on and on.

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The biggest problem that I see in the world right now is not all those terrible issues but something much more insidious. Right now, there is lack of vision of where we are going as a species.

Where are the leaders that stand up and put the seemingly impossible before us so that we all respond by saying "we can do it!" JFK said the following in his speech about man going to the moon…

We choose to go to the Moon in this decade and do the other things,not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win ...

What an incredible sense of vision that galvanised an entire country into action. Sure, there was a cost but he was making this speech in the middle of the cold war and dealing with issues like the Cuban Missile Crisis!

I like the fact that he stated that it would be difficult. Why should we be told that everything should be easy? I like a challenge and believe you can only have real victory when you’ve overcome adversity.

So where are the leaders like JFK that say, “I’ve had enough! I’m not going to run the country via an opinion poll but by the ‘content of my character’?”

Aren’t you tired of billions of dollars being wasted, being stolen or being completely mismanaged? We’ve just had a new class of destroyers being built in Australia that has had a near billion dollar over-run in the budget for a project that was supposed to cost $7.2 billion. For a start, $7.2 billion seems to me like a lot of money and secondly, how in the heck did they have such a massive overspend????

A few years ago I fired my accountant that did my personal tax. Why? Because it worked out that he was charging me the equivalent of $30 per line item in my bank statements….it was gross over charging. Where’s the leader that stands up and fires the shipping company that’s building the destroyers, demands reparations for delays and uses the money more effectively….maybe build a centre for science that’s funded, like, forever!

The challenges that we now face are not just American, Australian, European or any other region. Our species is now faced by global issues and what's amazing is that the average person is seeing themselves more as a global citizen rather than a citizen of a single country. Our leaders just need to catchup with what the globalisation that the Internet has really fostered. Individuals have broken down barriers between nations and cultures that are leaders are still yet to embrace.

What we really need are new leaders that can stand up and lead other leaders around the world in a common direction…this is no small task to ask. So where are these leaders? Most of us couldn’t even say who the Secretary-General of the United Nations is…..so it’s unlikely to be Ban Ki-moon that issues a “call to action”.

If humanity is to explore the solar system and beyond then we need the world to invest in that future. If we are to solve poverty and hunger then we need to world to work on that. How about disease that knows no international boundaries? We need to all work on that one as well. But what we need more than anything is some real leaders to stand up and point the way….heck, I’ll follow!

As a planet, we are faced with the very real problem of climate change. I’m not wanting to debate whether it is caused by man or not….the fact is, we are having massive extremes in weather. You only have to look at the droughts in Australia, floods in Texas and the retreat in the glaciers worldwide to know somethings up. So where is the leader that says, “Let’s stop debating and get some action that will assist those in need?”

I’m tired of half the world fighting obesity while the other half fights malnutrition. What is it that motivates a person to blow themselves up and a nation to execute rehabilitated prisoners? what I really desire is to turn my television on and be swamped with positive news about; new cancer drugs, AIDS has been solved, poverty addressed, diseases erradicated and rockets soaring to the moon. Let's demand with the flick of a switch that our media focuses on the good not the bad.

I look at the current self-absorbed generation that is constantly staring at their smart phones and say to them…go and do some time in the equivalent of the peace-corps! See what you can do to help your fellow man rather than complain that it’s taking 2 seconds for a signal to bounce of a satellite and get routed halfway around the world to the device in your pocket. The problem is that there aren’t any leaders for this generation pointing a direction for them to rally behind.

Sure, these are the big problems but how out the domain industry issues? There is still a lack of transparency in why we get paid what we get paid, no organisation that verifies statistics, a single dominant advertising network, advertisers that pay pennies for traffic that earns thousands of dollars to name but a few! The question I’m asking is, “Who’s working on fixing these problems?”

These are the questions drive me nuts….so that’s why I went away for some serious thinking time. What I was looking for was not an evolution in the domain industry but a revolution! There are so many ways that we can monetise valuable traffic that it makes my head spin but there are some very real problems to overcome.

For example, would you rather your cash paid every month for traffic or ten times what you normally get paid with a 120 day delay? For many domainers with mortgages they would instantly say, “pay now please” but how about those that can afford to wait for the long-term? Is there a way of effectively funding both groups?

How can we get conversion rate reporting rather than just clicks? This is the core value of quality traffic….how many people actually buy from being routed via a domain?

So after returning from my time away I have about 20 pages of notes and brimming full of ideas. So the next stage is testing, implementation and then again more testing. What I really want to get my teeth stuck into is some of the global problems…..and I’ll continue doing my bit by donating some of my time to a local charity. You have to start somewhere!

If you’re as tired as I am about the state of the world and our industry then please comment. If you’re one of the potential leaders that has a vision then scream it from the mountain tops as I’d love to hear about it.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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mgilmour
Chris, thank you for your kind comments. As to answering your questions.....I started by taking some time out. No matter how busy ... Read More
01 June 2015
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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.

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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.

In fact, if you look at the Google TAC (Traffic Acquisition Costs) graph over the last years you can see the TAC in a constant decline as Google buys traffic at cheaper and cheaper rates. The domain channel is but one part of the overall TAC number....sadly, this is not broken out as a separate number. It would appear that the TAC is now at the point where tier 2 players are a serious contender for the traffic. This has really made zero click a feasible option for domain traffic. The challenge for individual domain investors is to actually take advantage of this...

TAC

 

So let’s get back to the story. So who bought the domains being sold by investors and how did they buy them? Many of the buyers of the traffic domains did so with debt or investor backed money raised just before the financial crash. Post the GFC this became problematic as:

1.            Promised investor returns weren’t realised.
2.            Debt payments couldn’t be funded.

A number of funds that raised a lot of money found themselves in the awkward situation of dealing with boards that were screaming for results. Here’s what’s interesting. In the past it was good enough to buy a domain and get phenomenal returns from the traffic but now things were different. A different set of skills were required to extract every bit of value from the domain traffic.

A good way of thinking about the problem is like this. Previously you could bend down and pick up a nugget of gold while now you need to drill three miles deep and run a shaft two miles horizontally to find the seams of gold in the traffic. The gold is still there but it just takes more effort to get it out.

The individuals and companies that raised cash to acquire domains now needed a different set of skills to extract the value. For most companies the individuals have skills to find domains, do deals and do basic monetisation. Very few, to none of them had the skills necessary to extract every dollar out of the traffic.

The problem then became one of ego. For the years before the GFC many of the individuals that had established these domain funds had been lauded as geniuses. They were partying like there was no tomorrow and almost overnight they were completely out of their depth. Picking gold up off the ground is very different from driving shafts into the bedrock.

I remember being in a meeting with one such fund where my company, ParkLogic, had increased the revenue by 32% (versus a direct Google feed). The company refused to admit that this was possible and turned their back on the additional revenue. It turned out that there was massive political infighting and egos were being threatened because they didn’t have the skills to produce the same results. Lesson learned, it’s always easier to deny the facts then to admit you’re wrong.

These same portfolios are now being broken up into pieces as investors (and debtors) endeavour to get some of their money back. Domains that were purchased for 40+ months revenue are now being sold for 12-18 months.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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