A very interesting blog post over at Tech Crunch talks about human nature and the tenancy of selling out too cheap when faced with a buyout offer, or as the author puts it:
“””Entrepreneurs selling companies too early.
“””Several entrepreneurs here have described themselves as having a huge appetite for taking risk on the front end; but being risk-adverse when it comes to turning down a huge chunk of money for their dream.
“””Most people in the world would take the certainty of $1 million over a chance they could make $30 million.””
True.
And therein lies the key to being a really successful domainer.
It’s easy to look at those million dollars sales and say those guys are so lucky, or what a great deal they got, but in fact we forget how many offers they had along the way that they turned down.
Take the recently reported sales of Auction.com or Candy.com.
Sure the numbers are impressive and great for the sellers.
But how many offers did Rick turn down for Candy.com over the years. I’m not talking about the silly $500 offers, but the serious offers all great domains receive over the year, in the hundreds of thousands or low 7 figures?
How many $500K offers did the owner of auction.com turn down before selling it for $1.7M ?
How many of us would turn down “big money” to hold out for even bigger money.
You have to admire those who do.
And learn from them.
It takes alot to knock back an offer.
You have to have faith in what you do and believe in your product / domain!
I know many domainers who wont sell cheap and I dont blame them.
They dont need to cash out there investments people like Rick S – Frank S – Kevin H -Scott D etc these guys have build great portfolios and Im sure get six figure offers often and even seven figure but they know they domains are probally worth double digit millions.
Domains are stronger than ever and people are finally begining to get it!
Regards,
Robbie
The one who accepted $1.7M for auction.com may have continue turning down offers, who know maybe he will have sell for 10 millions further…
There is no admiration to have.
If you are making enough to live comfortably and have no needs then you can hold domains and be turning down offers for ever if you want or sell it when you decide.
Francois
Of course your right.
By selling you might be leaving money on the table.
The other problem is what do you do with the money once you sell.
We turned down serious money for our business a couple of years ago (8 figures).
In retrospect, very glad we did.
First the offer was way too low considering the total value of domains we owned.
Second if we would have sold out we would have had to do something with the money, buy real estate, buy stocks, buy mutual funds. In any case we would have with the rest of the world wound up losing 1/2 of what we got and all the income stream the business produces.
It’s always a tough call to turn down money, but you have to balance your upside vs. not getting another offer that good again for a very long time, with what your going to do with the money and how are you going to replace the income that asset generated.
The smartest move might be to say no.
It’s interesting though, how some domains like Auction.com might go ten years without a serious offer. I have some domains like Auction.com and some get offers all the time and others never, or almost never get an inquiry. I never understood it.
Johnny
What is one domain you own like auction.com that has never gotten an offer?
Over the years, my brother and I have turned down countless offers for PalmSprings.com, Daycare.com, Whisky.com, Rate.com, etc. Is it because we won’t sell? No, it is because we are never offered enough money to induce us to part with these gems. The main problem (for us) is that we are developers and know full well the revenue these names are capable of generating.
However, a new model that appears to be working well for us is active partnerships. Another company buys part of one of our names, develops it and we stay in as co-owners/consultants.
I have turned down many offers.
Like a high class CALL-man, I am easssssssssy BUT NOT CHEAP!!!
Once a good domain is gone, it’s gone. For people who invested capital & time building a portfolio, there’s a commitment there. Not about flipping domains.
If the names are good, the ROI will happen. R. Schwartz wrote recently on the importance of timing and patience. If an investor does not have resolve and sells too early, they’ll miss the opportunity. This assuming the domains are worth holding and are of true value.
LOL This is great:
“Like a high class CALL-man, I am easssssssssy BUT NOT CHEAP!!!”
“How many of us would turn down “big money” to hold out for…”
your dream.
Mike,
This is not domain name related but it is one of the greatest inspirational stories I ever heard.
Sylvestor Stallone was a broke ,out of work, actor who couldn’t get hired.
While watching a Muhammed Ali fight , he came up with the idea for the Rocky character.
Many people know that Stallone turned down lots of money for his script.
Even though broke, because he insisted he had to star as the Rocky character or no deal.
But there is so much more to that inspirational story as told by Anthony Robbins.
For anyone interested, log into YouTube and select:
Tony Robbins tells Rocky story
or this link:
How many people reading this blog does this post really apply to? I ask because guess what? To most of us reading this, I don’t believe this applies. If you own very good generic domains, then by all means guard them and hold out for those dream offers. If you own LifeInsuranceWeb.com, don’t get delusional.
For the rest of us who started within the last couple of years, I believe Rick Latona’s philosophy of selling as long as you have the ability/knowledge to get as good a name or better for the same amout as the one you sold. I won’t go into details but let’s just say I won’t hesitate to sell a name I got for $59 off Snapnames for $500 because I know that I can turn around and get a much better name with that $500 (from Snapnames).
For the record, I totally agree with this post and Frank Schilling monumental last blog post. It’s just that to 99+% of the people who are reading, it just doesn’t apply to us.
At one time or another, we all have to step back and regroup.
In about 1-2 months, I will cut my shrubbery way back. I should have done it last year.
By mid Summer, I’m positive it will grow back heathier and better groomed.
I’m also doing that to my portfolio.
A friend of mine use to say, the game is not over til we are 6 feet under.
We all have sold some domains too cheap. Hopefully we learned.
But, it is difficult to say “no”.
One of the secrets of being able to say “no thank you” is when you really don’t need the money.
we have plenty of monsters that are much bigger than auction.com that have never gotten an offer above its monthly revenue. Its surprising but it seems the bigger the name, the less inquiries it gets.
So who bought candy.com ?
When was the last time there was a monster domain sale by another domain holder where a domain name didnt change hands ?
@ David J Castello
The main problem (for us) is that we are developers and know full well the revenue these names are capable of generating.
My friend…that is not a problem.
That is a blessing!
It is one thing to be a domainer. It is an entirely different matter to be a domainer to envision what the end product is or could be and doing it.
I have often said – I am the end user.
That helps to justify the purchase even more.
this is one very good post
In the year 2000 (when DNA map was completed)
I turned down high $$$$$ offer for DNAmap.com .
During past several years I have declined offers from $$$ to $$$$$ for Biometrics.us , Genetics.us ,
Genome.us , Nanotech.us , TechnologyTimes.com ,
HollywoodTimes.com , Patiala.com , AntiHIV.com ,
MedicalRepresentative.com , BiotechDrugs.com and many other domains.
A broker from a top Domain Selling website had
offered me Ten Dollars for one of my domains named above !!!!!!!!!!!!!!!!!!
@Tony
Your comments are exactly the reason to read, listen and learn from peeps like Mike and the Castellos…
So one day you will have names that get great offers
@Tim
I already have names that get great offers but have no intention of selling. Like I said, I agree with everything in this post. I just don’t think it applies to the average domainer or for that matter 99% who read this. Just keeping it real…
Agree with Tony