I really enjoy reading all of the great domain blogs out there, and I like to read new blog posts as soon as I find out about them. The only problem is that I often read the posts before people have had time to comment. Because of this, I sometimes miss reading the great comments left by the readers and the responses to those comments.

For example, a recent post on SevenMile.com discussed why you should not necessarily sell domains at todays prices. Frank is incredibly articulate and always has amazing insight as it relates to our industry, but when he advised people not to sell, the one point I thought he missed (I know, blasphemy) was this: sometimes you should sell at todays prices if you can use the money to fund the purchase of better names.

After re-reading the post, I found that this point was addressed in the comments:

Posted by andy kelly | March 21st, 2008 at 7:45 pm

I really enjoyed your post – I totally understand your stance re: not selling unless the price is right but you have the luxury of great success (hard earned I know) Bottom feeder dealers like me sell / flip to finance new (hopefully better) domain purchases.
If a domain isn’t paying it’s way in ppc I give it 3 -6 months to get a decent end user offer, if it doesn’t get one in that timespan I flip it regardless.

Just another perspective, Great to see you’re back to making the occasional post ! Seriously, it’s great to have a domain expert blogging and giving his advice to the rest of us – bottom feeders included.

regards

andy
http://www.UrlAcademy.com

***FS*** Sell if you have to make money .. Nothing wrong with making money, but know what you’re selling and understand the value proposition of letting the good ones slip away, then price accordingly. Thanks for the kind compliment.

Great comment, and great response. Understanding the value proposition is key though. If you can sell a name, and with the proceeds of that sale you can buy an even better name, then you are basically trading up and you will increase the value of your portfolio. Remember that there is also an opportunity cost associated with holding names and not selling.

Then I continued reading and found another great comment:

Posted by dch | March 24th, 2008 at 2:54 am

Frank, great post. In the same vein, any comments on NameMedia and their “business model” of selling all of their assets until none remain?

I can’t imagine smart money investing in that IPO…half of revenue is non-recurring and can never be recovered! Talk about limited upside…

***FS*** Very well said .. Its a faustian bargain trading cash (which ultimately gets spent on salaries and ‘the machine’) for valuable names .. The names have been going up faster than the cash and many a smart domainer has bought good names from NameMedia cheaply.. I suspect they (NAME) think they’ve found a sustainable sweet-spot and can sell in perpetuity without eroding their core, but if you’re selling names that get even 30 unique a month, eventually the valuable marrow of their portfolio will get sucked away.. I guess it depends on how successful they are at replenishing.. I haven’t had any real insight into that end of things there. Clearly they are making a ton of revenue selling their names (20+ mil last year)..

The worst-case fear for industry participants is that NAME burns the furniture selling too aggressively so they can get higher EBITDA in the name of a big IPO pop. Staff backfills the good-names with crap from the drop and longer tail search terms without the same search resonance. The founders parachute out on the back of said IPO.. new management/investors move-in and essentially become bag holding patsys that can’t sustain the name-sales from before the IPO, ebitda falls, and we (the industry) get tarred with the brush of their model when the stock tanks and investors run from our space saying; “Those domain name investing companies are no good” – lumping the entire industry in with NAME’s fate. That’s a worst case scenario.

This response could be a post by itself, so if you are like me and sometimes read blog posts as soon as they are written, then consider going back and reading the good ones again.