I’ve been concerned about China’s debt levels for quite some time and the impact that a Chinese economic meltdown may have on the domain industry. After returning from a week’s vacation I decided that it was time to start digging into the data and piecing together a number of anecdotal data points.

It didn’t take long to discover that just about every major investment media source is concerned about China’s debt problems. Back in October 2015, The Economist had a little chart with the title, “Still Bingeing”, that outlined China’s total debt as a % of GDP. The chart can be viewed below

On the 22^nd Feb, Bloomberg News had a headline announcing that China’s debt will peak at 283% of GDP in 2019. To put this into perspective, the USA debt to GDP ratio is 104%.

Having a debt ratio of China’s magnitude is scary to say the least and many commentators suggest that this is only sustainable as long as China is able to maintain a GDP growth of greater than 6%. The problem is that the Chinese economy has not been growing as fast as the increase in debt levels.

For example, the country’s banks extended a record $US385 billion of new loans in January. Bloomberg news stated, “The increase in debt could pressure the country’s credit rating, Standard & Poor’s said on Tuesday, less than a week after the cost to insure Chinese bonds against default rose to a four-year high.”

The first problem is the Chinese economy is slowing down and is being propped up by massive injections of capital in the form of debt. So called state-owned “zombie” companies are being constantly bailed out rather than put down. These companies can repay the interest on loans but not the principal which just exacerbates the problems.

The second problem is the Chinese fuelled real-estate bubble collapses. Beijing and Shenzhen are up by more than 700% since 2000 and this has driven Chinese investors to look at high end top coastal cities in English-speaking countries. For example, Sydney, Melbourne, Auckland, Singapore, San Francisco, LA, Vancouver, New York, London….

The Chinese real-estate market has been falling for over a year and investors looked to the stock market, driving it up by over 160% in mid-2015. Dumb money entered the market and within 2.5 months the Shanghai Composite Index fell 42%.

The Chinese government has been trying to prop up the market ever since by buying hundreds of billions of dollars in stocks. This is an artificial way to keep the stock values from collapsing but ultimately the companies will be devalued to their true worth.

Some commentators are suggesting the index should fall by as much as 80% and sit around 1,000. Just watch the fall-out in the international real-estate markets when this happens!

What’s really interesting is the “non-performing loans” have jumped by over 50% between Dec 2014 and Dec 2015. “Non-performing loans” are loans where the borrower is defaulting. It will be interesting to see if the Chinese banking sector is healthy enough to handle waves of defaults. As 2008 proved the USA banks weren’t up to the challenge.

In the next article in this series I will apply this background of information on China to the domain industry.

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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.

I don’t know about you but I feel we live in an age where everyone seems to be shouting and very few people are listening. Companies are screaming out their marketing messages and now even some friends have fallen into the trap of effectively yelling via Facebook, Instagram, Twitter etc. What’s happen to the lost art of someone listening and giving you their undivided attention?

Mobile phones are incredibly useful devices but one of the most under-rated features would have to be the off switch. I get so frustrated when I’ve travelled to the other side of the world to meet with someone and they’re constantly glancing at their phone. I may be smiling but inside I’m resisting the temptation to grab their phone and stomp on it.

A few years ago I was having a lunch meeting where it became clear that anyone that called/texted/facebooked the person I was meeting with had priority over me. While they were on their fifth phone call I texted them and it effectively said, “Let me know when you’re available for our lunch meeting.”

If you’re waiting on an important call or message, then just apologise by letting the person in front of you know. Doing this is respectful and plain just good manners.

Sitting above our dinner table at home is a sign which says, “This is a phone free zone”. Both my wife Roselyn and I believe that having dinner without phones isn’t a big ask of our children. When the sign first went up there was some scepticism until one of the kids quickly checked their phone at dinner and just as fast mum whisked their dinner towards the trash can. Luckily for them it didn’t get dumped but they got the message.

In a world where we are constantly being bombarded with messages, listening to the person in front of you has almost become a lost art. To have someone give you their complete and undivided attention is sadly, almost archaic. There’s a very good reason why we have two ears and one mouth….we should all be listening twice as much as we speak.

Giving someone your undivided attention is not only respectful but amazing things seem to happen. Business can get done, you often learn something new and problems can suddenly easily be solved.

I recently went to the local optometrist, had my eyes checked and not surprisingly need to up my prescription. After wearing my new glasses for a couple of weeks I really wasn’t happy as their seemed to be a problem with them. I went back to the optometrist met with a staff member who said I needed to make an appointment with the manager.

I returned a few days later and the manager said that I needed to meet with the resident optometrist. I again returned a few days later and the optometrist didn’t bother to ask me any questions but wanted to test my eyes again. I stopped her and in some frustration said, “Can someone please just listen to me rather than jump to conclusions!”

There was a bit of stunned silence at my outburst so I took advantage of this and explained the problem I was having with the glasses and within a few minutes a solution was worked out. They just needed to learn to listen to the customer before the customer goes somewhere else.

I’m just as guilty as many of the people in my above examples…..but probably like them, I’m working on the problem. I lead an exceedingly busy life but that is no excuse for being rude and not giving someone my undivided attention. Please accept my apology if I have been rude to you in this manner. Likewise, let’s all learn to listen attentively before we speak.....in the meantime I just need to go and tweet, facebook and Google+ this post. ;-)

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.

A ParkLogic client is cleaning out over 80 three and four character com/net/org domains! Some of the domains contain repeatable characters like pppp.net and there are a number of three-character dot net and org’s as well.

The domains are priced to sell and we anticipate that they will be snapped up quickly by a buyer. The first buyer to reach out to Chris (see contact details below) and make an acceptable offer will secure the portfolio.

The domains will not be sold piece-meal but rather as a complete group. If you are interested in getting the full list of the domains then don’t hesitate to reach out to Chris Leggatt. He can be reached at “cleggatt at parklogic.com”.

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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.

Many domain portfolio owners get so focused on their parking statistics that they forget about other factors that impact the overall performance of their portfolio. In this article I would like to unpack the effect the Euro/US exchange rate has had on a portfolio and to illustrate that all is not as it seems.

I was recently looking into the performance of a particular portfolio that does a little over $20,000 per month in revenue. Given the size, I was confident that it was statistically significant for my analysis.

What I was investigating was the RPM (Revenue Per Thousand Visitors) trend so that I could try and understand what is going on with the overall performance. The reason why I was interested in the RPM is because the measurement effectively removes the impact of any fluctuations in traffic.

Since Sept 2014 the RPM for the account had dropped 6.5% from 13.85 to 13.00. Many portfolio owners have experienced some downturn across this period of time but I thought that further investigation was warranted. It just so happened that the portfolio had a large amount of European traffic and this got me thinking.

It wasn’t long before I had the below graph of the Euro/US exchange rate for the same period of time. The Euro had effectively depreciated by around 20% and this is what had contributed to the adverse results.

There was some good news in the all of this analysis. Even though the Euro/US exchange rate had dropped by 20% the overall impact on the client’s portfolio was only 6.5%. The reason for this is that as the Euro dropped versus the $US the ParkLogic systems automatically migrated the traffic to higher paying European monetisation providers. As the client was being paid in Euros this effectively meant they were being paid more.

Any traffic that was being highly paid by US companies remained with them as long as they were paying more than the impact of the exchange devaluation.

I know that this all sounds a little complicated but it clearly illustrates why systems like the one developed by ParkLogic are so effective in reducing external factors that impact the revenue line. We've found that if you leave all of your traffic with a single provider for longer than about a week, then you will be affected by things such as the exchange rate.

If you leave all of your traffic with one monetisation company and there is a crash in the exchange rate, then you will be in for a rough ride. On the other hand, think of a service like ParkLogic’s as being like a “stop loss”. If things go bad, then the traffic is automatically moved for your benefit.

Full disclosure dictates that I declare that I’m one of the founders of ParkLogic. It’s not often that I openly discuss some of the hidden benefits like the one above we provide our clients. It just so happens that the exchange example is a clear case of why traffic optimisation really does work.

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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.

I’ve founded a lot of different businesses over the years and there is one thing for sure, running a start-up is very different to running an established business. So what’s a few key things that I’ve learned?

The biggest mistake that many entrepreneurs make is they believe their cashflows and assume that success is only moments away. A cashflow is the result of modelling the business in Excel and often bears little resemblance to reality. There are a lot of assumptions that you are able to identify that are built into any cashflow and then there are a lot of other assumptions that never make it to your analysis because you never thought of them.

For example, today I was looking at a cashflow for a new business unit I’m working on and one of the major assumptions is the price of the new offering. When I put the cashflow projection together I really thought about the pricing and made sure that it at least looked sensible. Despite this, now that we are market testing the service I’m going to be looking at what real customers tell me more than my guestimates.

Many entrepreneurs also make the mistake of trying to make the perfect product/service prior to taking it to market. Don’t do this! You could end up spending a huge amount of time and money on something that no one will actually pay for.

My advice is to get something together as quickly as possible and get it in front of real potential buyers. Then, do a lot of listening. You’ll soon learn what they value and what they don’t. Don’t be surprised that this may be a LOT different from what you initially thought they’d want.

So here’s a good saying that we constantly say at ParkLogic, “Build the rusty mini-bike before the shiny Harley Davison.” In other words, cobble your product/service together before you automate everything and make it all perfect.

Where is your first dollar of revenue going to come from? This is the number one question that entrepreneurs should really be able to answer. It encompasses what you are selling, what value you bring and more importantly, who’s going to pay for it.

Really understanding the value you bring to your market is critical to the success of any new venture. Are you solving a complex problem? Making a task easier?  Or saving your potential clients money? Once you understand the value proposition then you can work on ways to build barriers to potential competitors.

One of the things that I really like doing is solving really complex problems. A lot of people shy away from tough problem solving but I must admit that I really enjoy it. I know that if I can crack the tough nuts then I’ll have loyal clients and large barrier to entry for any potential competitors. By their very nature, tough problems are also often the ones that get paid to be solved.

The next thing I look for is how to productise solutions that I developed for one client and run it across many. This will provide the scalability and impetus to really accelerate the growth of the business.

For example, when I’m looking at buying or selling domains I like establishing standardised relationships. I may lose a few percentage points by adopting this strategy but it allows me to scale my business by selling many domains very quickly. A lot of the hidden costs in buy and selling is setting up the relationships with either party. If you can give away a little bit of margin for a large volume of transactions then it’s a no brainer.

So there’s a few things that I look for in start-ups...most of them hinge around speed of execution, scaling and really understanding your customer. Let me know your own thoughts on what you like me discuss in future business related articles.

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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.