I don’t have some secret method to my madness. I have a wheelhouse that I feel comfortable with and I usually stay in it.
– Domain Shane
In the stock market there are different kinds of investors and traders. There’s short term day traders and then there’s a style called, swing trading. In this approach the trader doesn’t attempt to anticipate every market move but instead takes positions in stocks that have established a clear trend. The swing trader maintains his/her short/long position for as long as the stock stays within their preset parameters.
In this style or system of trading the investor misses out on the beginning and end of the trend but, when successfully executed, he/she will capture the meat of the move and obtain a handy profit.
A swing trader in the stock market has a correlate in domaining. It’s what that I call a “trend rider.”
Whether they know it or not, this niche is where the majority of domainers reside, most of the time, and it’s the place that I call home as well.
In part one of this series we talked about domain flippers and their strategy to buy and sell domains in the short term, usually weeks or months, for a modest profit. In contrast, trend riders acquire domains at wholesale and sell to an end user within a general period of one to three years. These types of domains are acquired at a modest price (sometimes even hand regged) and often sell for 50 to 100 times their cost.
The risk vs reward ratio is attractive because the initial investment is low and the potential return is relatively high.
The pros and cons of being a trend riding domainer:
- Small initial investment
- Great return on investment (ROI) when a sale occurs
- An attractive risk reward ratio
- A larger portfolio dilutes the effect of a few bad decisions
- Tendency to get in too early – ie the trend never matures in the marketplace
- Tendency to get in too late – ie the trend fades and past purchases become unmarketable
- Tendency to hand reg and buy domains in formats that are not popular
- High renewal costs due to extended hold time and a larger portfolio
- Large amount of time spent managing your folio – renewals, transfers, maintaining multiple platform listings, landing pages, bookkeeping, aftermarket buying and selling, negotiating etc.
- Over-estimating and over-investing in a perceived trend ie portfolio gets unduly weighted towards a specific niche segment
The Trend Rider skill set:
- Ability to identify mature trends
- Ability to identify and purchase domains that aptly portray a given product, service, industry or emerging technology
- Good grasp of current, brandable domain styles and formats
- Ability to drop domains when they are no longer trending
Trends from the past and present:
- Five Letter Domains
- Numerics and CHIPs
- Name styles – add suffix (Bitly, Deliveroo), drop a letter (Pixlr), creative spelling (Lyft)
- Products and Technologies – VirtualReality/Cannabis/Drones
- Two Keywords – InstaCart, WeWork, DoorDash, CreditKarma
- Double letters — Rradar.com and Saatva.com
- AgTech – SeeTree, PrecisionFarming
- Crypto – CoinBase, Ripple, BitStamp
- Lab/Labs – LabCorp, WeWorkLabs,
- Crowd/Cloud – CrowdRise, CrowdSpring, SoundCloud
Real life examples:
In 2015 I started noticing a wave of articles on startups in the ag-tech space. Over the next few months I purchased about 25 domains that began with Ag, Agri, Agro or Farm. I also purchased a few domains like FieldCow etc. To date I’ve sold 4 of them to end users.
In the summer of 2016 I noticed the emergence of a trend towards the double letter branding style. I even wrote a DNgeek article about it. Around that time there was special at Network Solutions for $1 and $2 registrations. So I registered about 100 double letter domains. Since then I’ve sold seven of those domains to end users.
- Brandable platform’s – domains added and sold lists
Coming up next time:
Part Three – Buy and Hold Domaining
Brandable domains in the GoDaddy close outs:
- ItRanks.com (2.8 mill exact match Google search results)