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part I, part II, part III, part IV, part V, part VI are here
They are waiting to join in, but will we help them, or just wait for them to figure it out on their own, if they ever?
As with most liquid markets, casual end users come from time to time, but they are not the market. Markets for the most part are comprised of industry professionals, wether wholesale buyers or collectors, those who make their living from the market and have intimate knowledge how the market operates. Look at stocks (90% institutional investors, 10% individuals), gold, bonds, silver, oil, diamonds, and even art. All those are mostly traded between industry professionals. Understanding that most markets are made of professionals, the conclusion is accurate pricing must occur or buyers will shop elsewhere, and in this case, may simply take their money and bring it to other industries, rather than our own. The other part of understanding that markets are made of professionals is that in order to grow a market, you need to attract more such buyers. Again, casual end users are nice but they are rare, hard to find, and usually do not stick around to buy more. Professionals on the other hand, such as in the domain business iReit, Marchex, Name Media, Demand Media, come with much more money, and usually stick around for a while. They are not looking for one purchase, they are looking for many. They are not looking to spend once, they are looking to spend for a while. And while it is nice to see one domain such as Toys.com sells for over 5 millions, Toys R Us, the buyer, is not going to stick around and buy any more domains for those prices. Attracting professionals therefore, is the best option we all have to grow our market substantially.
But how do you attract professionals? It comes to one word: Education. If you read David Kesmodel’s The Domain Game you will remember the chapter about how Marchex first started (educated by Frank Schilling), which also was the cornerstone for one of the major deals in the business, the purchase of Yun Ye domain portfolio. When iReit first started they invited a number of industry professionals (myself included) to New York City for consultation. Ireit was co founded by Houstonian domain veteran Marc Ostrofsky as he teamed with financial backers from New York City. Name Media was founded on the purchase of an industry power house, Buy Domains. Buy Domains, Mike Mann’s company, had a proven track record, major revenue, as well as extreme intimate knowledge of the domain industry.
Attracting end users is how we all affirm ourselves we are in the right business. Attracting industry professionals though, it is how we noticeably grow an industry.
While we have a number of goals at Bido, an important one is to bring more such professionals to the domain industry. If such professionals can see how existing professionals buy and sell domains, grade them, analyze them, understand them, quantify them, there’s a good chance at some point they will be participants as well.
In addition, we’re working on an additional product within Bido to attract such professionals in a way which was never yet explored in the market, a new revenue stream for the professional investor that make it easier to get in the business. More on this at a later point as this product is scheduled for release late 2009.
Have a great day,
Sahar
I enjoy this series. Keep up the good work!
Sahar,
How about a reserve on Bido just to cover costs of acquisition and renewal fees?
I have some domains I registered myself and have renewed several times and I’m sure there’s domains others are holding where they paid good money for and now wish to liquidate but don’t wish to lose the out of pocket monies.
There’s two kinds of liquidations. One where you need to get rid of a domain due to a change of plans or the usefulness of the domain has passed but don’t need to sacrifice your up front money. And another where you need to liquidate and get what you can.
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Jeff,
Watch out for next week announcement, it addresses some of your concerns.
Cheers
Sahar
Sahar,
Your series on accurate pricing is pretty informative and on point! It is very important that prices are set at the right level, especially in this economy.
For example, the great thing about Bido.com is the fact that “the market” is the determining factor behind the final price of each sale. In other venues, the high prices that some sellers set as their reserve are what make buyers “pass” on great domains!
So in the case of Bido, the $1 start is the greatest pricing point possible; but when you start an item at $1…it would most definately have to be:
(1) something that is in high demand (e.g., a great domain name), and
(2) enough qualified buyers looking to buy (once more people sign up & the economy improves…I’m sure that we will see better names being sold at much higher prices).
Bido will have great success eventually, because of the great business model (maybe Bido should continue to feature the one-a-day $1 auctions…but also incorporate other types of listings on the site as well)…but it might take a little time for the skeptics to see that it really is a good concept.
Best Regards,
Ron
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Thanks Ron. We’re all learning as we progress. Our goal is to be in full force by end of year. So far we’re still testing models, working on features, and testing some more
Thanks for the support!
Sahar
Hi Sahar,
yes i agree with most of what you wrote. We were reaching the critical mass and awareness and prefessionalism where mainstreet was gonna come join join us and get more involved and madison avenue. The economy has halted that for the time. However, ironically it is exactly that , that will force both small and big investors, and small and big endusers to get involved with our industry, as investors or endusers.
I agree fanatasy pricing has to go though.
cheers
Guy