Liquid Value archive at Conceptualist.com, By Sahar Sarid

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Archive for the 'Liquid Value' category

It Is Evident, I Really Wasn’t Kidding About The Importance Of Liquidation

Published on July 11, 2009 in Bido, Domain Names and Liquid Value. 9 Comments

With the economy where it is, where 50%-66% Pay per click revenue drop is a reality to many, your liquidation options are now more important than ever. I wrote a lot about it in the past so all I’m going to do here is link to these stories (below). The rules of the game have changed on all of us. It isn’t just about chasing the dream anymore, to many, it is about SURVIVAL. No one really knows how bad things may be but the feeling in the air, “it is going to get worse before it gets any better“. My advice to you is not to wait for the last minute, start liquidating today and build cash reserves for what possibly is in the near future - worse economic times. If I have to sum it up in one word I would say: “URGENCY“. The urgency is ON, and you do not want to wait to the very last minute to start acting. Those who will survive this are those who are prepared. They make decisions long before it is too late to make them. They do not react for the most part - they are proactive. It is late now but still better than waiting to make those important decisions tomorrow.

And why so many bold lines here? What I really am trying to communicate with you is the URGENCY of the situation. I hope I’m relating this to you and not for you to look back months from now when possibly nothing is left and say to yourself, “If anything, I should have really paid closer attention to that one post“.

Have a great day,

Sahar

What Is The Liquid Value Of Your Domain? Part II

Published on April 24, 2009 in Bido, Domain Names and Liquid Value. 1 Comment

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I started this series here (part I). Why understanding the market value of your domain is important? I believe it is all about creating opportunities. Let’s explore further shall we?

1. Charitable donations

Via About.com:

Donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. Not everyone will be able to deduct their charitable contributions, however. You will need to itemize your tax deductions in order to claim any charity.

“You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions.” (IRS Publication 78)

The better you can relate the value of a domain when needed, the easier it is to claim a charitable donation.

2. Taxes

Via The Domain Tax Guide:

How do I report capital gains & losses?

If the value of your property changes.. you get the picture. If you can show it in a cut and dry manner you make the job that much easier.

3. Insurance

Self explanatory here. If you want to insure your assets, understanding their value is essential.

4. Inheritance

Understanding the value of your assets will give you a better picture what you are leaving behind to your loved ones, and possibly, how to split it between those.

5. Joint ventures

If partners bring in assets, quantifying them with dollar amounts ahead is the smartest way to go about it.

6. Funding/Equity

Raising money, giving equity. For you and for your potential investor, you must know and relate what you have before discussions get meaningful

7. Loans

Getting a loan on a domain? Whoever loans you the money must understand the value of what you have. The more accurate you can relate it, the better and faster the process will be.

8. Trades

No two domains are alike, some are worth slightly more than others, some are much more than others. You can conduct a fair trade between domains even if they don’t match value. First, convert the domains in question into dollar amounts. Than, once agreed by both parties, trade may occur and one may end up paying the other some in order to make up the difference. In such a trade scenario, accurate pricing is a must.

Would love to hear your thoughts on the above and other reasons you may have in mind.

Have a great day!

Sahar

What Is The Liquid Value Of Your Domain? Part I

Published on April 22, 2009 in Bido, Domain Names and Liquid Value. 11 Comments

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Knowing what your assets worth is fundamental business practice. It helps with insurance, taxes, attract investments and partners, marketing, selling, and various other business dealings. The benefits are there but how to do it? To understand better we need to look at related industries. Take gold coins for example. To understand the value of your holdings you look up comparable sales data. Various companies in the gold coin industry provide grading and authentication services (PCGS, NGC, ANACS, others). One of my favorite videos I often send to associates is of PCGS’s president/founder David Hall. See below:

As you can see, the process of grading coins is complex. It involves highly trained professionals, processing, blind testing, and some more testing. Over the years I bought PCGS coins “sight unseen” simply for the fact these coins were sealed and graded by PCGS. I could count on quality, authenticity, and a name behind the coins. Why grading is important? PCGS says this:

If rare coin dealers only dealt with other rare coin dealers, there would be no need for coin grading. The two would simply decide on the value of the coin and conduct business accordingly. However, the coin market has expanded far beyond dealer to dealer transactions.

When the rare coin market was limited to a small number of numismatists trading with each other, three broad definitions were enough to determine grade: “Good” — a coin with most of the detail intact; “Fine” — a coin with clear detail and some luster on its surfaces; and “Uncirculated” — a coin which had never been in general circulation and therefore retained its Mint State condition.

As the market grew, collectors realized that some “fine” coins were finer than others. Even some uncirculated coins rose above the rest in detail, luster, and general appearance.

Soon terms such as “very fine” and “extra fine” began to emerge, as collectors sought to further define the condition of their coins — and increase their value. In 1948, Dr. William Sheldon, a renowned numismatist, developed the Sheldon Scale, assigning grades from “one” through “70″ to coins on the theory that a “70″ would be worth seventy times as much as a “one”.

Although coin collectors agreed on the scale, they could not agree on the standard — and assigning a Sheldon Scale grade to any given coin was still a matter of subjective opinion.

And the solution, again from PCGS:

Industry leaders were deeply concerned that without standardized grading the rare coin industry could face major problems.

Over the course of many months of meetings, the blueprint for the Professional Coin Grading Service evolved.

The advent of the third-party appraisal of a coin’s physical condition, backed by a guarantee, and a national network of reputable coin dealers could provide an extremely reliable form of protection for rare coin consumers.

PCGS would create a climate in which consumers could participate in the coin market with greater confidence.

Selling these coins a day later for about what I paid for isn’t a problem as PCGS is recognized for quality and service within the coin trading community. Because of that price consistency, one can use PCGS price valuation for various business dealings, as mentioned above.

My two main questions in last few years are 1. How to build liquidity in the domain space similar to PCGS? and 2. How to push this further and even do a better job?

Before I go into my thoughts on this I’d like to invite all for a constructive discussion about this. What do you think? How would you go about achieving such goal? Is it even a goal worth pursuing? Is it important to you?

Looking forward to reading your replies here.

Have a great day,

Sahar

Why You Should Insist On Liquidity

Published on April 8, 2009 in Business, Domain Names and Liquid Value. 4 Comments

First ask yourself: What is the worst that can happen? Then prepare to accept it. Then proceed to improve on the worst

-Dale Carnegie

If you are like majority of domain name owners your majority of income comes from pay per clock advertising (PPC). Pay per click advertising for domain owners is being reliant on others’ advertiser-base and fair revenue sharing practices. In current form, most PPC business online as well as for domainers is controlled by two companies: Google and Yahoo.

The liabilities are:

1. Two control pricing. You do not need two to go out of business to spiral down, one will do. If one drops the other literally can do what they want to put prices down. The rule here is the 95/5 rule. That rule, in real estate leasing, says that your ideal price is where you have 5% vacancy. If you have more you are charging too much. If you have less you are not charging enough. Back to commerce, if the standing partner start to reduce payouts, ideally they could go on and on until they are at 5% deduction without worrying much about it. And who’s to leave if there are no viable alternatives?

2. As we all know, both Goolge and Yahoo are black boxes. Very little information is shared with their downstream providers and less with you. Worse, even if all information is shared you would never know the contracts in place as well as what Google/Yahoo are doing behind the scenes. One would think that can never happen but we don’t need to look far to know better.

So the question of the day, what would you do if the PPC train stops at its tracks right this moment? Say you wake up and your provider says Google or Yahoo shut down the channel. Worse, they are not paying you for business provided claiming channel is closed due to channel fraud? I know, it will never happen (right?), but hypothetically speaking of course. What would you do? Where would you be? How will this affect your life, family, and business?

By failing to prepare, you are preparing to fail.

-Benjamin Franklin

I had these questions and more in my head since the days I started in the business. I spent many years building alternative revenue streams, businesses, as well as put systems in place for that day that “will never come”. From all I’ve done, since like you, we own domains (assets), the most important part of the equation is to be able to liquidate when needed for the most possible. This is not to say I will get end user prices for those names, it means if I need to liquidate tomorrow morning, I will get the most I can tomorrow morning. How you may ask? We built Bido of course. Bido has a strong pool of buyers, reach, and technology in place to accommodate such needs. But more important than Bido here is what you can do about it. For liquidity to be strong it has to be exercised regularly. If liquidity is something that isn’t happening than when the time comes that you need it, potential buyers won’t understand the message and benefits quick enough. No pressure (buyers) in your liquidity channel means weaker sales prices.

So while you may think liquidity is only needed when you need it, that is just not the case. Preparing for liquidity is as important as liquidity itself. But why am I wasting your time here with this nonsense anyways? Life is still good, while we make a little less it can never get worse. Right? Right! We all know, THIS can never happen to us... right??

Flavius Renatus Vegetius said:

Let him who desires peace prepare for war.

My adjusted version for the above is “Let him who desires financial stability prepare for bankruptcy.”

Have a great day!

Sahar

The World Has Changed (But Not For You!)

Published on March 28, 2009 in Bido, Business and Liquid Value. 6 Comments

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Reading this morning about Monster Venture Partners closing doors, it brought back recent thoughts I was going over and yet to write about.

I visited our office yesterday, said hi to all, spent few hours with our teams going over stuff, the usual. I asked a little about revenues, progress, milestones. Talking with my partners further I thought to myself maybe it’s time to trim some costs, maybe it’s time to explore selling some ventures. I remember the days we were burning through hundreds of thousands per month and it meant nothing to us. I remember the days where we were offered hundred of thousands for a domain that didn’t have much value and we replied “We just don’t have what to do with the money”. - worst, we actually meant it!

The world has changed.

For some, as with MVP, it is too late already. For others, it is on the verge of disaster, and for many others, the thought of things going south, as they very well may, is terrifying. What are your options is the question you should be asking yourself. A couple of years ago while visiting a close friend in North Carolina, the question was put in front of me. “What would you do if your income was to cut to half tomorrow morning?”. We got on the phone with my partner Jeff talking about this issue, and while it was again unrealistic, Jeff agreed we need to prepare as well. I left that day with the thought I must put something on the side, fast. Not that we haven’t until that point, but we had to kick things up a notch. We’ve prepared very well over the years. We own many different businesses, many revenue streams, as well as built a very efficient liquidation engine (Bido), for you as well as for us. The question is, have you prepared? And let’s ask this question again, as many believe the worst is yet to come. What if your income again cut by half? Can you take that heat? Do you have enough on the side? Do you have exit strategies in place? Can you generate your current income at will if current disappears? Yes, many said it will never happen to them. Of course, many were wrong. One of my favorite books out there is Ben Stein’s “How to ruin your life“. I applied his process to Health before, but let’s try it now with financials, shall we?

1. Your financial position is sound and safe: Everyone else is wrong, you are right. Your financial situation is just as safe as yesterday, the year before, and ten years before. Matter of fact, it is SAFER. It is because the worst is now behind us. It is because Madoff got caught. It is because the stock market bounced for a couple of days in a row (excluding yesterday, but that doesn’t matter to you!). You are safe because you have 14 days of income on the side, and in the worst case scenario, 14 days is more than enough to do it all again. Who needs more? That is two full weeks for god’s sake.

2. You will never go out of business: All these others people who do go out of business are really clueless about business. Rob monster? It’s a different generation right? He is a dinosaur, he does not understand the times, the internet, generation X/Y/Z. He failed a couple of times before too therefore is it really a surprise he failed yet AGAIN? He really doesn’t understand business. You on the other hand, it is your first business, maybe second, and you have never failed before. You are a rock star. You my friend, are perfecto! Going our of business? Who are we kidding?

3. Never fire anyone: You read it right. Hire and hire and hire some more. Firing is not an option. Google just fired some 200, many other companies have fired many tens of thousands, but not you. You need to hire more. Times are tough and it’s time to get tougher. They fire, I hire. Oh right, you do not have anyone in the co. besides yourself but still, firing is dumb!

4. The sky isn’t falling: They all scream but you know better. Of course, you haven’t been around much in your life, but you know better. Why? Intuition of course! THEY don’t have that now do they? They are not as gifted as you are they? So brush it off, the sky isn’t falling.

5. Our industry is recession proof: Of course it is. The rest of the world falls apart but not us. Have you read the latest DNJournal articles? New services, stellar sales prices, million dollar sales every couple of weeks. Right, not in your bank account but still, everyone else is getting rich, and while you have no idea of the fine details, they really don’t matter!

6. If you need to, you can always sell for half of what you want, they will all pay: Now why nobody had though about it. You own an asset, say a domain, and you KNOW it is worth 100K. You can always sell it for half tomorrow right? It doesn’t matter that no one out there believes it’s worth 500$. For you, it is 100K, and if you were to sell (of course you do not need to find out, you KNOW) people will pay up. Right? Right!

7. Party much, party hard!: Let’s go to Vegas shall we? Let’s go to Cancun shall we? Let’s go to Mexico, New Orleans, LA? Party hard baby, and don’t ever stop. You work hard you deserve to party hard. Defy the times, defy the economy. People are out of jobs, people are trying to figure out what to do, people go out of business, some are even hungry, but all that has NOTHING to do with you. Book that flight baby, book that 500$/night hotel. book it now!

8. Add yours here.

Cheers

Sahar