Supernatural Agency: Online business tales

Paul Graham of Y-Combinator on how the entire environment for doing start-ups has changed. I don’t need to elaborate- just read the post. Brilliant and incredibly important for any entrepreneur.

If anything validates our virtual business model this is it.

When you venture into the world of three and four word type-in domains there are still a lot of choices. You could just be random or pick fun or silly domains and they will probably still be worth more than your investment down the road. But why not focus on finding the highest value names, names that will either monetize very well or acquire high value to someone else in the near future (or both)?

Here’s are some key things to consider when buying these domains:

1. Are they associated with a big-ticket purchase? We own domains associated with buying diamonds, remodeling kitchens and learning about reverse mortgages. What do these have in common? The people searching on these terms are seeking information that will lead to multiple or high value purchase decisions. This means they are easy to monetize and easy to populate with high value content.
2. Do they make sense as a search phrase? Using Keyword Tracking services can help you identify the kind of phrases that people actually enter into search bars. That’s why we own DisadvantagesOfReverseMortgages.com. It’s a common entry for people researching the subject.
3. Is the universe big enough to support a marginal domain? Niche domains are fine as long as the niche isn’t too granular. You need subjects that affect millions of people to gather any kind of traction.
4. Does it require research? The key word here is ’search’. People will get to your domain because they are looking for answers. Obvious subject areas have less value, complex subjects have higher value.
5. Is the subject an emerging technology, issue or trend? These are the gold areas for reselling domains. If you correctly identify an emerging subject matter and buy all kinds of iterations of relevant words you’re going to have buyers down the road. I’m not going to give examples here!
6. Flip the phrase. If you can’t get ChicagoCondoInfo.com maybe you can get CondoInfoChicago.com. People type search terms in backwards syntax all the time.

There are still lots of good domains out there but the inventory goes down every day. That’s why you need to focus on the high value now- in a year from now the jig will be up.

This great post about growing a business without creating a larger footprint is revolutionary, IMHO. We’re entering an era of business efficiency in terms of resources that means you can build a substantial business without a big footprint. 37 Signals does it by constantly improving their customers’ ability to self-serve:

• Easily sign-up for services online without assistance
• Easily find answers to Help/CS questions online or in the app
• Design User Interfaces (UI) that are completely obvious and self-explanatory

In others, build a business that works so well that you don’t need to constantly hold your customer’s hands.

37 Signals has eight employees and million of users.

Or build a business like ours that doesn’t need customers (I’m still thinking about whether this is true!).

My business partner was sitting up last night buying dot com domains- I think there were martinis involved

This morning he sent me a list and wondered if I thought they were too goofy. I sent him a blog post on domaining I’d read and commented on and then wrote this to him:

Well, if you read the comment I left on the blog you’d know that I’m starting to think that practically anything we buy will be worth at least 100x what we paid for it in a year. If that’s true then we should be buying practically everything we can afford to buy, but, and this a big but- I still think there should be a clear path to developing traffic and monetization as a benchmark for deciding to buy a domain because that’s where the big money is. Those domains should be worth 1000x what we have into them.

How much would you pay for a site that made $3600/year? If you think like an investor you’d gladly pay $10k for that site to realize a 36% annual return on your money. So if we build a site to the point that it makes $10/day it is conservatively worth $10k or 1000x what we paid for it, probably more because once a site hits that number it won’t stop growing in pageviews and revenue.

This whole thing, IMHO, is the biggest no-brainer I’ve seen in my life as a business opportunity. It’s so big that the big players aren’t even hiding what they are doing- wonder why? Because they know they’re creating a much bigger market cap which drastically increases the value of their portfolios. There’s no reason to hide the activity, in fact they undoubtedly think the time has come to expand the market.