(image source)
Tough economic times, especially for those who have not gone through such turbulence times, can be extremely confusing. Questions such as “Should I continue to hold?”, “Is my income going to shrink again next month?”, “Should I bet all on this venture?”, or “Should I cash out my chips before it is too late?” are not uncommon. Matter of fact, these questions (and more like them) are common not only with those struggle, but with those who still do well in this economic climate.
A couple of weeks ago we went to a comedy show at the Hard Rock Hotel And Casino here in South Florida. As we arrived, one of the valet employees welcomed us with a big smile, “Would you like to park in the front?”. Not thinking much about it, I said .. “Sure, how much is that?” and he replied “50$”. Needless to say my response was “I’ll park ELSEWHERE!”.
And during the stockmarket rollercoaster days, who can forget Black Friday? The reports came out relatively strong, some places posted increase as well.
And then, a couple of days ago my girlfriend and I drove to a neighborhood coffee shop in Wellington, FL, about 50 miles away from where I live. I was reading about the place a little online and thought to go there, experience. When we left, after a cappuccino and a tea, the check came out to US$ 7.70. Can you believe this? 7.70$ for something which cost pennies to make.
If all that is not enough, our industry is taking a hit as well. Even though some places continue to report ad spending increase if you look at your income level, you know something is wrong here. With all the increase reported for the online world, why is it then our income continue to drop?
What this all tells us is times are changing. We have to rethink everything we know, about business and life. Is that coffee that important? the 50$$ for valet parking, does it make any sense? What this tells me that money is extremely cheaper today than in the past although it is much harder to come by. Kind of a Cliché to say that in business the only thing you can count on is change, but it is true. And if we accept it as the truth, then the conclusion is we have to constantly adapt to changes, in an essence, reinvent our business model, our approach to financials, our approach to business.
But, it is not all doom and gloom. What got many of us here, especially those in the domain name business, is great timing as well as solid business fundamentals. Due to natural resources, what worked for the oil barons of the 19th century worked for us in the 21st century. Type in traffic, a human behavior phenomena, coupled with scalability, just made sense. Things have changed but fundamentals have not. People still eat, drink, shop, learn, invest, get married, divorce, and make babies. As entrepreneurs, our nature is to go and do more. The words “massive action” are all too familiar to us. “Sitting back” is not an option, but maybe it should be? Even when dancing, a step back may take us two forward. Couldn’t that be part of what we need to do? A step back to move forward. Doing less in order to do more. Maybe we need to get back to reading, learning, reflecting, in order to move forward? Pause, analyze, reflect, plan, act. I don’t know what the answers are but I don’t think panic is the answer. I believe we need to slow down, think what is important, invest further in educating ourselves and our families/loved one, learn history, and move forward.
At the end these times are just another test. Many years from now we will be able to tell the story to our children and grandchildren. For me, I rather tell the story of fundamentals, not luck, nor panic. I rather tell the story that what worked hundreds of years ago worked for me, and will work for you. I rather tell the story that when times get tough, I don’t get tougher, but smarter.
Have a great day,
Sahar
we all need to learn to change and learn to adapt to change…
but what would the change be….what would it bring…i’m not so sure…
Great Post Sahar!
Times are changing and people need to Wake up and Smell the Coffee!
Yes money is harder to come by but all we need to do is open our eyes into other markets.
We are a small industry with only a few thousand active domainers but we can all make changes to help grow our industry.
We all have so much knowledge and wisdom lets put our minds together and come out stronger, smarter and of course richer!
Regards,
Robbie
Great wisdom and insight shared today Sahar that should make individuals really analyze their current situations.
Everything happens in repetitive cycles, whether it is the economy, business or life. History teaches us this daily.
The answers everyone is in search of can be found by looking back at history if you are willing to digest and learn from it. During the great depression, many millionaires lost their fortunes due to the stock market crashing. Many placed all their eggs in one basket and in the end, paid dearly for it. Fast forward to 2008/2009, Did investors/corporations learn from this historic lesson and mitigate their risk in case it repeated itself again? Obviously not, and the only thing that has saved many of them is the Government financial bailout, which of course still can not fix the recession we are currently in. Additionally, it still may not save them in the long run.
Now lets talk about the Domain Industry. Did domainers learn from the dot com bubble in 2001-2003 and mitigate their risks with depending on only domain names and PPC revenue? The answer to this is unfolding rapidly. The answer is becoming apparent with names selling at great prices, and PPC companies potentially becoming obsolete with Google’s new Domain Park move. Those who remained innovative and proactive continue to function in the same capacity, regardless of the current state of the industry.
Back to the depression: However, there are thousands of individuals, companies, and businesses that found ways to become richer during the depression when the traditional ways of building wealth were no longer effective. Those who built new wealth adapted, became innovative, and delivered to human needs and behavior. These are the people and companies who became the new leaders of the business world.
The cycle of evolution always weeds out the weak and lets the smart, determined, and entrepreneurial strong survive and prosper. The animal kingdom has always shown this historically. This is what is happening now for business. The game changer in this decade that provides several of the new opportunities is the internet.
I agree with you 100% that what worked 100 years ago will still work today. That is the motivation to adapt and innovate with the changing times. It is to think differently, provide services that embrace human behavior, to take a new path that was always less traveled, it is to remain an entrepreneur and never supplement entrepreneurial spirit and commitment.
Take time to educate yourselves, and look back at history what business pioneers did to adapt and become new leaders of the business world, when there was supposedly no way to do so. Again, only the strong will survive who continue to live and embrace the entrepreneurial spirit to the fullest, even after achieving wealth.
Its funny at the end of the day, the harder you work, the luckier you are to people when you make your fortune. When you make the decision to stop learning, the outcome will result in you never reaching your full potential in life and financial freedom.
Complacency stunts growth, and the domain industry has remained complacent for years. Just look at PPC companies and conferences if you want proof. Watch out, here comes evolution, doing what is it is suppose to do, weed out the weak so the strong can make change and fortune.
Enjoy your day.
That’s right… Good post Sahar. We need to be re-educated and re-think things pretty much from scratch because the rules of the game have changed drastically whether one wants to believe it or not… Trying to hold onto old habits is really going backwards… We need to re-invent and innovate for the next 5 years in a relatively short period of time if you haven’t been doing this already… Then again in a few years… And again… If you are not completely sold on what is actually happening right under our noses, well.. just sit back and relax then and when the storm hits you will get swept and go belly down because you failed to ignore the most basic warnings and take action.
PPC earnings are shrinking and the forecast overall for the PPC domain parking business model is looking more and more volatile and it will continue to decline and eventually just disappear one day when you wake up when big G or Y decides it’s time — because unfortunately all of the good that comes from it (type in domains) are almost cancelled out by abuse (low quality traffic arbitrages/ppc fraud)
Domain sales are going to be coming down in 2009 as valuations of domains further decline as well… Paying crazy multiples for very little traffic or revenues just doesn’t make sense anymore and the talk of all this potential… Well, it’s gotten old.
I’m bullish on the domain game….. But I’ve recently gotten more involved and re-energized with the industry as a whole because there are plenty more opportunities still to be had and I have gotten some great deals this past few month’s which I wouldn’t of been able to put together if it wasn’t for the “changes” that are happening. I bought one domain for $7,200 from the original owner after some intese negotiating back and forth.. He wanted $60k . This domain is in the adult/webcam niche and is making solid 4 figures per month with very good conversions on direct leads that continue to re-bill monthly. I’ve already gotten my initial investment back and will continue to roll in profits for years to come.
Good luck to us all…
Mike
http://www.wannadevelop.com
Sahar, if you think $7.70 is expensive for two items at a cafe, don’t visit Athens, Greece - that same price will be in euros!
At least you don’t have to leave a tip…
one step back, two steps forward.
Hi Sahar, I like your anecdote about the $7.70 charge at a “coffee shop”… I never understood Starbucks or any coffee shop that charged more than a dollar for a cup of coffee. Why waste money on a few sips and a napkin?
The real test now for domainers is to “reassess” the value of their domains. Letting many domains sit at Parking Services (PS) maybe made enough income to pay for the renewal of many of our domains, but now, PPC income has dropped below the 50% mark from just six months ago. The decline in revenue was easy to watch, if you think biting your nails is “easy”.
Your last statement: “…when times get tough, I don’t get tougher, but smarter” is the truest statement for domainers to consider at this moment. It’s time for domainers to reassess their domains by evaluating their monetization paths, and then move accordingly. I have some simple advice on how to move forward at my blog, Successclick.com.
Great article, Sahar. Keep up the good work. I hope you’re going to Domainfest in Jan 2009! I’m gonna give you a great big Viking bear hug! Then, of course, your next drink is on me!
—-answer—-
Reassessment may be my next post. A couple of days ago I discussed past purchases with a friend and mentioned a domain we bought for 55K some 4-5 years ago. I asked him how much he thought it would be worth today and he said around 200K. My guess would be more like 50k-100k if I would list today and sell within 30-60 days. Things do change and to be honest with yourself is one of the most hardest thing one can do., especially when it comes to unusual investments, such as domain names, gems, scarce items, etc.
Cheers
Sahar
As usual, a great read.
Love that picture as well, somehow it just makes me relax.
Adam
Even in the worst of times, there will be some areas that will continue to defy the odds. There is a big move by the government to strengthen broadband usage, and this will upscale the user base, prompt new initiatives and business models inherent in this space - in a way that nuggt be directly good for domainers.
Being on the right side of the fence makes all the difference in life. And being prudent, may save you from an early heart attack from a life of obsessive and meaningless indulgence…. Stay positive, the Internet is probably the best of the worst neighbourhoods to be in now.
Your thoughts are extremely wise and timely Sahar. Thank you for sharing what felt like a vacation from the stress of it all. If I could suggest one book, that tells that explains the current changes in the most graphic way, it’s “The World Is Flat 3.0″ by Thomas Friedman Don’t miss this book.
Warmest thoughts,
Damon
Thanks all for the kind words.
Cheers
Sahar
I am in south florida for business and visited the Hard Rock over the weekend. What a great casino. All i kept thinking was “where is the recession?”. I couldn’t get a parking spot in self-parking and had to wait about 20 mins for someone to leave (didn’t want to pay the $10 for normal valet, and wouldn’t even consider $50 for special valet).
Then I saw people playing at $500 minimum blackjack tables. I stuck with my $25 table which they raised to $50 on me. I guess it is the only game in town so regardless of the economy they will do well. Atlantic City, NJ casinos are taking a hit and you can see the evidence when they have $15 BJ tables on a saturday night which was unheard of last year.
Great post Sahar.
Times are changing - change with it (I call it sink or swim).
Greetings to you Sahar and all your family and all the readers from Croatia.
“When we left, after a cappuccino and a tea, the check came out to US$ 7.70. Can you believe this? 7.70$ for something which cost pennies to make.”
I’m surprised that you make this comparison - as you must receive them yourself everyday probably in the form of ” You want HOW MUCH for that domain?? - it only costs 7.95 to register!!
There is lot more to selling a cappuccino and a tea than a few pennies. Somebody has to lease some space, hire employees, build a store, meet various government regulations, etc. The cost to the coffee bar is substantially more than a few pennies - you get the picture - I’m sure. Besides being an active (but half time) domainer, I’m in the coffee business (We are doing very well and our business is up substantially over last year - so no sour grapes here - we are thankful), but I get weary of reading that yet another person has seen “the light and that coffee is way too expensive” - EVERYTHING is expensive and everything is cheaper if you make it at home - so what? - isn’t that the way its supposed to be? Weak business models will die - and they should die. The market (except when the government interferes with it) it very capable of looking after itself - its wonderfully efficient.
$50 to park the car up front…yeah okay - no offense to people in the valet business - but I agree that does sound over the top.
Anyway Sahar I agree with the spin behind the post - I just couldn’t let another “coffee is too expensive” example go without responding.
Have a great Christmas - we are coming down to Boca for Christmas/New Years and can’t wait to feel that South Florida air!
Peace and Grace,
Tarry G