The Gift That Keeps on Giving: Long-Term Domain Benefits Worth Pitching
One of the main areas where visionaries tend to stand out compared to the rest of the world is represented by their willingness and ability to embrace a truly long-term perspective. When Mark Zuckerberg for example worked on Facebook, he did so with the long-term potential of the platform in mind and this is best illustrated by his willingness to simply turn down offers of $1 billion and $2 billion back when MySpace was still around and when many considered the offers in question ludicrously high. These offers would have enabled him to live his life without ever worrying about money again, yet he simply said no.
The same way, domain investors such as Michael Saylor and Rick Schwartz have also embraced the word “no” and that is precisely how they ended up generating blockbuster sales. How many of today’s domain investors would have refused a $22 million offer for Voice.com? Most likely not many, yet the offer in question was barely enough to get Michael Saylor to talk to the then-potential buyer and pitch him on the long-term selling points of the property. The same way, Rick Schwartz has amassed a fortune impressive enough to make pretty much any investor jealous and did so without having thousands of sales under his belt like many of his peers who started investing at roughly the same time. Why aim for 20 mediocre sales per month when one blockbuster sale per year is more than enough to give you everything you could have ever hoped for in terms of financial freedom?
A Domain Name is YOURS
Such a simple yet powerful statement! However, here we are in 2020 and many end users still haven’t internalized it, they still fail to understand what exactly makes the statement in question powerful. The same end users are more than willing to enrich their marketing consultants by (over)spending on marketing campaigns in the spirit of “branding,” where the positive effects (if any!) stop manifesting themselves as soon as the money stops flowing in. The same end users who pay exorbitant rents for offline real estate that barely stands out or who accumulate debilitating levels of debt to acquire such properties, yet roll their eyes when asked to spend a mere fraction of that on online real estate.
They simply do not comprehend the importance of the domain they invest in today being theirs forever, with a paltry yearly renewal fee being enough to ensure that happens. A domain is not a marketing campaign which needs a continuous influx of money. You do not have to pay prohibitively expensive rent to maintain your property. Furthermore, you can acquire it without needing debt in many cases and guess what: your asset doesn’t belong to the bank until you pay for it in full plus interest such as with the previous example, it is actually yours with no additional strings attached.
Why Isn’t This Selling Point Getting Through Properly?
While there are CEOs who truly get the game-changing implications of permanence with respect to their online presence, they represent the exception rather than the norm. For most decision-makers, it seems this selling point isn’t compelling enough to convince them to take action and this begs the question: why exactly is this the case?
In many situations, the explanation revolves around the fact that a wide range of smaller decision-makers are involved and not only are they not incentivized to embrace options such as investing in something permanent, it is in their best interest to preserve the status quo because… well, job depends on it.
Why would a CMO try to convince the CEO to embrace permanent cost-effective options which might enable the company to do just as good or better without continuously throwing money at marketing? Wouldn’t he effectively be jeopardizing many jobs, including perhaps his own, in the process? Of course he would because again: the incentives are hardly aligned in this instance.
Or to provide a public sector rather than private sector example: ask a public servant why he doesn’t do his best to cut costs and run his department in as effective of a manner as possible and many will laugh in your face. Why? Simply because if you do not spend the budget that has been allocated to your department, you will oftentimes be on the receiving end of a budget cut next year… why do that to yourself? On the contrary, not only are you not incentivized to run your department in a cost-effective manner, incentives line up when it comes to the exact opposite approach: doing your best to justify a budget increase, which means that saving money would not just be unrewarding, it would actually be counter-intuitive.
This tends to be the part where many domain investors expect a miracle fix in terms of pitches but unfortunately, there is no such thing and the only intellectually honest answer to any solution-related question tends to frustrate people immensely: patience, patience and more patience. How many domain names has Rick Schwartz sold for example? Not that many. How many offers has he refused? Let’s just say it is difficult to envision a day going by without someone that has a portfolio similar to Rick’s in terms of domain caliber receiving at least one offer which could be considered “reasonable” in terms of reseller market metrics and even if we are to accept this narrative (refusing one offer per day, he probably refuses more), we are looking at 365 (366) refusals per year, obviously thousands over a multi-year period and almost certainly over 10,000 in terms of his activity as a domain investor thus far. The same principle is valid when it comes to Michael Saylor and at the end of the day, there just is no other way: “patience” always ends up being the name of the game.
Has Rick Schwartz developed the habit of reaching out to end users and asking them for offers, like many in the domain investment space do? No. Michael Saylor? No. Why? Simply because while it may seem like a solution on the surface, it would put them in a vulnerable negotiation position and given the price targets the two and others like them have in mind, this strategy would be of little real-world benefit.
Instead, both of them simply deployed patience and waited for end users to “wake up” one at a time. At the end of the day, you as a domain investor do not need hundreds of CEOs to knock on your door each and every day. All it takes is one truly spectacular deal per year or even less to be more than financially secure, so time is on your side if you are in a reasonable enough financial position to begin with. This is also an aspect worth highlighting because while it may be easy to say no to a million dollars if your net worth is in 7 to 9-digit territory, the same principle isn’t valid when it comes to thosewho aren’t as well off.
What Should Most Investors Do?
As mentioned previously, it is difficult to approach negotiations from a position of strength if that strength doesn’t exist. Sure, you could try to fake it until making it but the likelihood of this representing a feasible approach is quite low. Instead, when starting out, most investors should be pragmatic and think of it as a two-step process. On the one hand, your goal will be reaching financial stability in one way or another. If you will, establishing a solid enough foundation for you to be able to say no without it being gut-wrenching. On the other hand, once you have achieved the goal in question, it’s time to aim higher.
Too many investors fall short when it comes to the latter. Even in an industry as small as the domain investing one, there are countless examples of individuals who have achieved financial security thanks to domain names in one way or another. One the other hand, stories involving such individuals who took things one step further and achieved Schwartz or Saylor-type results tend to be multiple orders of magnitude harder to come by.
One word: comfort.
Once the average person is financially secure enough to embrace a comfort, moving beyond their comfort zones by for example setting more aggressive price targets ends up representing (ironically) a hard sell. This is because most investors assume that since their current model enabled them to become financially secure (which is no small feat, by the way!), it doesn’t make sense to let’s say replace a winning horse.
However, and as a conclusion to this article, replacing a winning horse with an even better one is oftentimes the way to go if you are serious about becoming the best of the best. At the end of the day, it’s all a matter of personal preferences and priorities. If comfort is more than enough for you and if you do not consider that pushing yourself further is warranted (perhaps you assume that even if it would be a good decision financially, it would for example be detrimental to your overall happiness level), there is nothing wrong with that as long as you “own” this decision. The bottom line is this: those who want to replicate the Schwartz/Saylor approach when it comes to domain investing or anything else have the blueprint right in front of them. Executing it properly, however, is easier said than done and with that in mind: good luck with whichever approach you deem appropriate!