By: Robert Haastrup-Timmi
The above title question was asked on Domain Tools following the news release of Oversee.net receiving 150 million dollars in VC funding. I felt it would be interesting to throw some light and share my perspectives relating to this question here on Sahar’s Blog:
This is not the tip of any iceberg or domain bubble. What this strongly suggests is the VC industry is starting to recognize a new investment asset class that has remained benign for several years now.
If you are a domain investor holding a credible portfolio of domain names, you are now about to join unknowingly, an elite class of land owners online for the next several decades throughout this century. Unfortunately most people and domainers included have very little understanding or have a parochial view of “why the world is now flat”? and why the internet has changed and disrupted everything conventionally forever!
If you understand wave cycles and how new industries emerge over time, then you can clearly see where I’m coming from. Kindly read my article on “Why Domains are the Best Investment for the Future“? to see if you share my futuristic perspective on where we are ultimately heading, and why everything online starts with a domain, hence the value.
To elaborate a little further, it is important to take a macro perspective on why domains are experiencing exponential growth and why this is just the beginning! In my article, I suggest broader awareness of what a domain actually is, and why it will ultimately become “common sense” and ubiquitous to the average individual at some point in the very near future. Herein lies the exponential growth values which are still un-realized today.
Think about it, everyone on earth knows what a car is, what real estate is, what stocks and shares are and indeed the empirical value of all these aforementioned asset classes. However most people on earth are still benign but not ignorant to what a domain actually is, however most and are entirely ignorant to a domains inherent value. Inevitably, for reasons I suggest in my trendirama article, all of this will change quite dramatically and unexpectedly, not because domainers generally make that happen, but because of natural macro economic forces such as the “great credit crunch” we are currently experiencing for instance, or massive job cannibalization driven through disruptive technologies.
If you were alive in the late 20’s, you had no idea that television would become so ubiquitous because you thought the big screen was the big deal! then came along the 2nd world war which ultimately led to the biggest economic growth for the next 50 years! real estate, tv’s, microwaves etc…I believe we are on the verge and about to experience something very similar in kind, that will make domains a common sense investment for everyone, simply because that is what almost everyone will aspire to own like cars and houses.
I’ll leave you with one last thought! just think how much on average it costs to start a conventional bricks and mortar business anywhere in the western world, and you start to see that most domains today are peanuts by comparison to what they will be worth in 10 years time. No wonder why the likes of Kevin Ham are laughing all the way to the bank!
Excellent post! Right on point!
Good read.
If you can’t build your portfolio in .com extension, other extension still available for grab. You just need to know your target market before you spend your money.
The .com is great today, this is 20 years in the making. Other extensions are still young but bright future ahead.
I disagree and think you’re biased.
There are several things that could crash the domain value and your article is just obtuse. The PPC model could change to PayPer Acquisition, advertisers could pull out of affiliate sites (which we’re already seeing), a webGuide for the internet could minimize url type-ins, etc, etc.
While brandable names will continue to accelerate in value, type-ins could be the most troubled. At least mention these hurdles in your next article rather than yelling ‘gold rush’
DC Mike:
I could argue that you would be biased too if say for instance you owned real estate as most people do and believed say 3 years ago that prices would could continue to escalate. Of course every asset class experiences boom and bust cycles, that goes without saying.
If you diagnose what I’m saying prudently, my perspectives are generally in view of the long term, which is why I’m fairly certain about the point I’m making. Look at it this way, real estate, art and the stock market are all asset classes that have existed as a universal “trading”? market over several decades right?
Domains by comparison, is only half way through it’s first generation cycle and by some measure experienced it’s first crash around the dot com bubble crash in 2000. Well guess what, even the most pessimists will now agree that they probably missed an opportunity by simply not taking a long term view or through lack of understanding of the deeper fundamentals of this unique asset class.
People are naturally emotional when they are holders of any asset class, but that is besides my point. To be perfectly honest, I am one of those who missed out on the massive real estate boom, partly because I thought it had peaked back then say 5 years ago, but look at what happened! lots of real estate owners made money if they held on for the long term and took the right exits. You can say the same for stocks and art through their historical wave cycles.
Domains in my opinion are no different contrary to cynical view points such as yours and will continue to evolve exponentially for several decades albeit boom r bust cycles. PPC as you mention, is just one element of this industry’s potential and if you understand your assets properly, then you realize you do not extract value on PPC alone!
If you were an investor in Google shares at their IPO debut in 2004, would you honestly have thought those shares offered at $80.00 would be worth over $500.00 as they are today? well, there are analyst’s who actually believe google shares have much much further to go, some even suggest $1000.00 a share! maybe they are looking at areas the average joe blog does not envisage right? I suspect the cynics regarding domains either don’t own any or simply have no fundamental and analytic methodology, hence the cynicism.
I will elaborate further in my next article very shortly.