The Brandable Insider: The Secret Path to Profits

“Domaining is a hard industry, very few make money but many like to pretend that they do.”Morgan Linton, Co-founder of Fashion Metric

I like to play poker. No-Limit Hold’em to be precise. But I’m an average player and I don’t play very often. However, despite my shortcomings, over the past 10 years, I’ve won more money than I’ve lost. How can I say that? Because I have an Excel spreadsheet to prove it.

What’s the secret to my success? Well that’s easy. Smart money management. Huh? Let me explain.

Even on a bad night most players will have at least one big winning hand or a series of 2-3 winning hands in the space of a 15 to 20 minute period. It happens so often they’ve given it a name. It’s called a “rush.” At the end of the rush a player is often profitable for the entire poker session. Sometimes by a wide margin. But players tend to get excited, over confident and greedy at this point in the game. As a result they keep playing and over the next few hours they lose all of the money they “won.” Many lose all of their chips, buy more and then lose them again. Often ending their session deep in the hole.

In contrast, I’m profitable. Why? Because I do the one thing they don’t.

I leave.

It’s simple. After my rush, I cash out and go home. Even if I’ve only been playing for 30 minutes.

Why am I telling you this? Because poor money management is, in my opinion, the number one reason why domainers are losing money. Domaining is a very competitive micro-industry and often professional domainers only sell 2% to 3% of their portfolio in a given year. This means the line between profit and loss is a tightrope walk and poor portfolio management can easily eat up potential profits.

The domainer’s tale
This is how it usually goes…….

We’re hand reggers our first year. This is a good thing since we don’t really know what we’re doing in the beginning. If we were smart we’d have studied the industry first and only started buying after several months of accumulating market knowledge and naming skills.

But let’s get real. Nobody does that. From Drew Rosener on down we’ve all just jumped in and starting registering domains right off the bat. It’s an unnecessary, but pretty ubiquitous, right of passage in our industry. Even though hand regging often leads to a portfolio dominated by low quality names it can also have the effect of getting our feet wet and accelerating our learning curve in real time as long as it’s done in moderation.

So the first year is usually characterized by accumulation and little or no sales. Many impatient domainers, expecting to get rich quick, implode at this point and either sell their domains for pennies on the dollar or just let them expire and walk away.

Growing up
The second year is a crucial test for a domainer. By the end of the second year we either have a profit, a loss, or we just don’t know. If we’re not keeping careful records and don’t know our total income and expenses for the year, then it’s a darn sure thing that we’re operating at a loss and we’re just avoiding the issue.

The second year is also crucial for other reasons. For one it’s the year we grow up as a domainer. Because by then we have somewhat of a working knowledge of how to judge and evaluate a domain. But. We also have renewal fees that can annihilate any chance of a second year profit if we don’t purge our portfolio and get control of our expenses.

Objectively evaluating our holdings and cutting out the dead wood is absolutely necessary for maintaining a healthy portfolio and preserving profits. This is something that every successful domainer needs to learn and do on a monthly and annual basis.

More to come
Next week, In part two of this topic, I’m going to itemize and discuss the various criteria and methods used by veteran domainers to trim and maximize the sale-ability of their portfolios. This practice is an important part of profitability and good money management and is an absolutely crucial skill for a successful domainer.

Meanwhile here’s a curated list of domains for sale this week at NameJet:

Keith deBoer

Keith DeBoer is a part-time, domain investor with an emphasis on brandable domains. He's a domain industry writer with published content at BrandBucket, DomainShane and NamePros. He's also a brand ambassador for BrandBucket and by day, he works as an Internet consultant.

9 thoughts on “The Brandable Insider: The Secret Path to Profits

  1. Great post, Keith. I think good money management and financial records are not discussed enough in domaining. Not only for keeping yourself in check, but for proper planning and organization of your portfolio.

    Love that you used the poker analogy. I’m a player myself and have noticed an alarming number of similarities between domaining and poker.

    1. Hey Joe, Thanks for the read and the comment. Yes there parallels between poker and domaining and also stock trading. I think the common thread is they are all speculative “investments.” 🙂

  2. Very well explained Keith and much appreciated!
    By the way, I’m one of the rarest domainers who didn’t invested in his first year of domaining and just went onto reading and reading a lot for may be couple of years before seriously started getting involved!

    1. Serious props to you, Abdul! There are a few people like you who waited. I have great respect for that. It shows a lot of patience and discipline. No wonder you are doing so well! 🙂

      1. Thanks for your kind words and much appreciated 🙂
        I sometimes feel that I gave more than enough time for reading and researching than to start investing but overall I’m happy 😀
        Even today, my idea is to buy slowly and be very selective and this has paid me very well over the years.

  3. This was a timely article Keith. I am beginning my second year of the domain business. In the words of Kenny Rogers classic song The Gambler,

    “You’ve got to know when to hold ’em
    Know when to fold ’em
    Know when to walk away
    And know when to run.”

    There are times when I just need walk away from looking for another domain. Thank you for the reminder!

  4. Thanks Keith, great read as always. I like the poker analogy too, but think it is important to keep something in mind. It is not necessary to “walk away” from the game (or from buying/ selling domain names); it is necessary to control your emotions and not overplay your hand. But I think persistence and never stopping to play/work, is the only true way of becoming a pro.

    I am a big fan of “Outliers” by Malcolm Gladwell. One of the basic premises of the book: luck/ talent only pays a small part in how good you become at something. Spending 10,000 hours of solid practice at anything, makes you an expert. I believe that holds true for the business world as well. I have and am working with very successful CEOs and none of them ever “walk away”. But they do know how to tell when they sit on a winning hand, and when it´s better to remain in a holding pattern.

    I guess just an addon to your article, not a contradiction in any way. Spending time on solid maths in the end is what makes you an expert and teaches you what makes and what loses money.

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