The Flaw in My Business Model | DomainInvesting.com

The Flaw in My Business Model

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People often comment that domain investors live the easy life. There is a stereotype that we make a lot of money for doing just about nothing but owning good domain names and making money via pay per click advertising. While some businesses may essentially be on auto-pilot, mine is not.

It’s no secret that I make a living primarily by selling domain names in the aftermarket. A very quick look at my records shows just under 77% of my overall revenue comes from the sale of domain names. Another decent chunk is from selling advertising on my websites, which includes this Blog.

Therein lies the problem. If I am not selling domain names, writing content, or selling advertising, I make very little money. I don’t live the stereotypical domain investor lifestyle. This is the primary reason for my development activities.

Websites like DogWalker.com, CatSitter.com, and (hopefully Burbank.com) need very little day-to-day management. They generate revenue just about every day because they were built on solid foundations. Some of my mini sites are the same way, while others aren’t. Those are basically crapshoots, but they would have made nothing and not been indexed in Google had I simply parked them.

The point of this post is to encourage domain investors to come up with other ways to generate revenue and to help dispel the myth that domain investors do nothing but sit on their asses and get rich. I work more now than I did at AIG. I can set my own hours, work from wherever I want, and I can basically do whatever I want, but it’s not as easy as some people make it out to be.

If you have a solid strategy, some decent financial backing, and you are willing to put in some time and effort, you can certainly get rich if you become a domain investor – even today. You just can’t really expect to make a lot of money quickly.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (34)

    George Kirikos

    One can have an income of $0/yr, but be increasing one’s *wealth* (through the appreciation of one’s assets).

    July 6th, 2010 at 5:11 pm

    Elliot

    @ George

    That is very true.

    July 6th, 2010 at 5:13 pm

    Leonard Britt

    Yes, one has a great deal of flexibility in how their time is scheduled but in the end one’s domain sales or websites have to not only pay for renewals but also provided an acceptable source of income. It is easy to find companies who could potentially find a domain of use for search ranking or branding but it is a totally different issue to convince them of that.

    Likewise with websites, most of the traffic comes from being on page one of the major search engines especially Google. A lot of effort can be invested in development with zero payoff until the site starts to rank. Even then only a small percentage of visitors will click on an Adsense ad or buy a product from an affiliate. Ad sales and lead generation are other means of monetizing a site but require additional work to implement.

    The flexibility is great but there are other challenges :)

    July 6th, 2010 at 5:35 pm

    Josh

    “The point of this post is to encourage domain investors to come up with other ways to generate revenue and to help dispel the myth that domain investors do nothing but sit on their asses and get rich.”

    Elliot, its called a wife. :)

    The real measure of your wealth is how much you’d be worth if you lost all your money. Ain’t that touching, now pay your visa with it.

    July 6th, 2010 at 6:52 pm

    TV

    I bet the 77% was close to 99% a few years ago before you started getting into development? One could argue that you’ve identified the problem and you’re moving in the right direction…….

    July 6th, 2010 at 7:35 pm

    Duane

    Constantly having to flip domains is a dangerous game and can end up costly. Also its a pain in the … constantly chacing the next deal.

    I think your on the right road pushing towards steady income from developing certain domains. Maybe I am wrong but could it be that your trying to play to many games at once?

    One business (domain / website) at a time is about as much a one person company can handle if wanting to make things happen.

    Just my past experience.

    July 6th, 2010 at 8:11 pm

      Elliot

      @ Duane

      “Constantly having to flip domains is a dangerous game and can end up costly. Also its a pain in the … constantly chacing the next deal.”

      I don’t think it’s dangerous if you know what you’re doing.

      July 6th, 2010 at 10:01 pm

    Dean

    That sux I was hoping to get rich overnight, Lol. The truth (myth) is that you end up working more hours when you are self employed, but it’s not a bad thing if you love what you do. I despise working for anyone else as I honestly feel that your time (my time) is the most valuable asset we have and I always felt like I was being robbed, no matter how much I was being paid working for someone else.

    The down side is I am too easily distracted working from home. Always something nagging (no not my girlfriend) or tugging at my sleeve. I am working to create some sites where I can sell and distribute my own products. My goal right now is to have a space within a year that would be devoted solely to that project and have a place to work away from home. Having a place where I could shut out the world is my idea of Nirvana right now.

    July 6th, 2010 at 8:31 pm

    Josh

    @Duane, I agree, very dangerous, stay away :)

    July 6th, 2010 at 10:04 pm

    Rob

    Hi

    I have been operating a Website http://www.buysellbusiness.org/. How do I scale the traffic to a point I can get some revenue from this initiative?

    July 6th, 2010 at 11:18 pm

    Elliot

    @Rob

    Offer people valuable information they can’t find elsewhere.

    July 6th, 2010 at 11:28 pm

    Luc Biggs

    Flipping domains is not dangerous at all. It’s probably the saftest and most profitable game you can play in the world, if you know exactly what you’re doing. Of course it can be dangerous if you don’t have an eagle eye for the right domains, or if you have a low sales ratio.

    (I am talking from experience here; I flip names to end buyers every day).

    July 7th, 2010 at 2:02 am

    Christoph

    I don´t know from where out of the blue did this stereotype of “rich internet guys” referring to the investors in domain names come from, maybe the media off the internet liked to inflate something in order to attract audience but the truth is that most of us including me has started from scratch, from nothing. I for myself have started with a budget of 0.00 and in order to rise to that position I have now – there is first investing money in order to get the knowledge, to learn the lessons on how this business works. If I hadn´t my other jobs ( there are two jobs ) I wouldn´t probably be able to invest a single cent into this domain name business as I would take care of buying a piece of bread first.
    The truth is, domain name business, specially developing businesses from that domain names you own takes amazingly lots of hours of very very hard work and dedication like you are rising your own child.

    The myth of the get rich quick sheme regarding investing in domain names should be wasted because it is not true for the most of us, even the guys who become rich today were working hard in earlier times, in times back to the mid 90s where I did not have a clue even what the thing called internet was.

    Cheers

    July 7th, 2010 at 4:01 am

    Alan

    Dean

    “Having a place where I could shut out the world is my idea of Nirvana right now”

    I’m dreaming of this place right now … :-)

    I think anyone that works from home is often labeled as someone who doesn’t have a real job. Our parents all got up and went to work in the morning but this generation we are fortunate where people can make a good living working from home – even as part of a group due to the remote access in this world.

    However, unlike technical engineers who work in teams all over the world creating something (even remotely at home in their underwear) is the domaining industry provides the fuel for the fire of “lazy” or “not a real job” perception since most domainers are not builders.

    Remember those people you knew who had a lot of money buying up real estate lots and just waiting for someone to buy them without ever actually building anything on it. Its the whole passive investor perception most domainers struggle with as an identity because other than a portfolio of names you really aren’t building anything of value to the outside world. Someone wrote an article a while ago about the investment of domains being similar to collectibles such as baseball cards. In many ways its true to everyone else around. If you told me you owned parkavenue.com and I said “that’s great – what are you doing with it?” (the first question almost anyone would ask) and you respond – trying to sell it. Well, its not really an exciting conversation because (a) you have just become a salesman to that person and (b) you’re not doing anything that seems to involve any work.

    If a value is not provided to the public with your domain name (not PPC ads) then its quite likely an impossible task to be perceived as more than just a collector or be defined as having a real job by the general population.

    That guy with Missouri.me is a prime example of someone who is really working hard to get people excited about his site and has won kudos from a lot of big domainers I know. You see, that’s a story to tell. The story of owning names and just trying to sell them is not so sexy.

    Even the guy who owns empty lots will forever have a hard time being labeled as anything more than a salesman unless he builds a house.

    July 7th, 2010 at 5:54 am

    Priv

    To live in USA with mortgage, rent, kids college etc you need more than domainer income, let’s face it. Maybe a couple make enough but the rest don’t.

    So you need a couple of top sites or a cabin in Montana or Costa Rica to manage during the tough times.

    July 7th, 2010 at 6:21 am

      Elliot

      @ Priv

      Because of the domainer income, I haven’t needed a mortgage :)

      I know quite a few people who do what I do full time and do well. However, the point of this post is that I don’t want newcomers to have illusions of grandeur and/or think they can make a lot of money without working. I work very hard in all aspects of my business. I think it would probably be an example of the 80/20 rule where nearly 80% of my business is generated from 20% of the work I do (buying/selling names).

      July 7th, 2010 at 6:52 am

    Stephen Douglas

    What’s disturbing is – get ready for it people:

    “EL THE SILVER ONE” WORKED FOR AIG!!!!!

    I really didn’t need to know that, bro. But we forgive you, don’t we? Gang? Sound off… I’ll be the first… I forgive you, El.

    Now, come make a comment on my blog – I’ll look beyond your sordid past.

    July 7th, 2010 at 6:22 am

      Elliot

      @ Stephen

      I was just a lowly marketing manager in the Accident & Health Group. :)

      July 7th, 2010 at 6:53 am

    Jeroen

    Most of the ‘autopilot’ guys were once in your stage too i guess. But even when everything is on autopilot, they will find an excuse to keep working just because they like what they are doing. Domaining and developing are just too exciting because you never know what new opportunities you may encounter.

    The ‘other’ way to generate money with domains is exactly what you are doing with dogwalker.com and burbank.com for example. Another way is to market a business niche that you don’t own. Have a website where you can be a middlemen between consumers and a brick and mortar high value businesses like attorneys, building contractors etc. Most websites talked about on webmaster forums etc are about digital products, affiliates etc. Especially if you are good with SEO and are genuinely interested, you have so much advantage over a random business owner who has to outsource the online marketing of his business. This is something I think domain investors are able to do a lot more.

    I’d say 99.999% of my income is earned offline by freelancing in an entirely different business. I have a lot of time available to work on my online ventures so my goal is to have that 99.999% earned online one day.

    cheers

    July 7th, 2010 at 7:54 am

    Afif

    Elliot, have you tried venturing into revenue generating adsense sites. Making some initial investment for good sites generating money via adsense can be a stable income source (As long as you follow the rules).
    Investing in adsense sites via buying or building them can make you more than $1K passive income with an initial $10K investment which in m opinion is worth it.

    July 7th, 2010 at 8:21 am

      Elliot

      @ Afif

      I have several websites with Adsense on it, some of which are much bigger than others. This revenue is 4 figs a year and is a part of the remaining 23% of my business.

      I am a bit confused about your statement, “buying or building them can make you more than $1K passive income with an initial $10K investment which in m opinion is worth it.”

      I don’t think spending $10k to make $1k a year is worth it. 10 year ROI is not great in this business, IMO.

      July 7th, 2010 at 9:10 am

    Stephen Douglas

    @El “Sweet Silver-Tongued Devil”

    Oh sure. You had a “meaningless job” at AIG. Well, sir, I have my team of PI’s digging into your past, turning over every stone of your despicable history of oppression of the citizens of our Socialist Republic of Obama (whenever that arrives).

    Already, I have some news coming in from one of my most trusted PI’s, Frankie “The Salami” Bologna (pronounced “Bo Log Naah”). His initial report is that you were actually the “Hidden Genius” behind AIG’s amazing growth during Bush’s early years.

    They called you “SILVER C”, meaning, you were the top dog, unattainable by most in the company, because you worked inside Dick Cheney’s man-sized metal safe, and came out only when GW Bush visited, (Bush was instructed to bring your favorite treat, blueberry muffins and raw coffee grounds mixed with Red Bull, or you wouldn’t come out).

    That’s right folks. All you Elliotsblog readers have been patronizing a seemingly sweet, lovable, pure “domainer”, who in his past life, worked hand-in-hand with the Bush Administration to profit from whatever destroyed our economy. El was pretty busy, cuz Bush had lots of things for El to do to help him screw up everything.

    NEWS FLASH: I’m calling it right here, right now — (I’m not even waiting for the DNA tests), El Silver IS DICK CHENEY’S EVIL TWIN!!! (I know that seems biovular, but believe it or not, El is the MORE EVIL OF THE TWO!)

    Okay, that’s old news. Let’s move on before I get in trouble here at the homestead.

    El, my wife (who always says when I complain about you, “but he’s so cute”) is instructing me to invite you and your family AGAIN to our July 30th party at our place on the river. Of course, as always, we’ll pay your airfare and all other costs. Please RSVP by transferring one of your premium GEO domains to my account at Moniker. I was thinking “Burbank.com”. Yes?

    UPDATE: Last year when you came, you beat me at ping pong. Not once, but several times. Well, every time we played. My arm stopped working after the 53rd game. 53-0 (you winning) is suspicious.

    Then when I found out about your laser-guided paddle, (Andrew Allemann was watching you closely and noticed the red laser beam extruding), I felt that was unfair. The final proof was a friend of mine who is an MLB umpire (can’t say his name cuz of NDA) who was naturally hiding in the shrubbery, said he clocked your serve at 115 MPH. That seemed a little slow, so I decided to look into it. You know I videotape everything on my property, so I replayed our 53 games at super slow-mo. NOTE TO SELF: Hard to watch losing in slo-mo

    What I found was, when it was your serve, I never saw the ball. All I saw was a small trail of flames. This is exactly what my security cameras caught. You raising your “special paddle”, then hitting the ball, what was visible was a bluish-orange line of glowing heat coming over the net. I have deleted the video of the look on my face as I stood there waiting for your serve, after you already served. Don’t laugh, it’s not funny.

    Anyway, after further investigation, what I found was that you actually have control of every techno powered device ever devised, and I think that’s unfair to the rest of us. How can we keep up? I know for a fact that if I want to toast bread in my new toaster oven, you can send a command to my oven telling it to “burn Stephen’s toast”. Oh sure, blame it on the scotch, but I know it’s you!

    So, readers of this blog, beware! El Silver is actually James Bond, retired. (no, he really is!)

    Anyone who thinks this is a joke, this is me, Stephen Douglas. Would I write something satirical? Would I ever write something questioning the thinking of popular domainers? Of course I wouldn’t.

    Signing off,

    Stephen Douglas
    -alias “Agent 008″ (I hate the fact that my code name sounds like i’ve eaten too much)

    P.S. The way you can find out if what I say is true, is to check my blog at http://www.successclick.com, and see if this person who calls himself “Elliot” has ever posted a response to one of my blog articles. I feel like David Letterman calling out Oprah.

    (Time spent on this piece is a result of a nice big domain sale. Sorry that it’s private)

    July 7th, 2010 at 9:16 am

    Josh

    Elliot, have you ever considered not making more money but rather volunteering your time, maybe a homeless shelter or soup kitchen? I find getting out and helping others at least 3 days a week has done wonders for me personally. You cannot put a price on true peace and it comes by giving back, for me any ways. Just a thought!

    July 7th, 2010 at 9:19 am

    Elliot

    @ Josh

    I’ve thought about it all the time and almost done it. The problem is that I travel a lot in the summer, and one thing I don’t want to do is make a commitment that I regret because I can’t follow through.

    But also, as you can see from the post, I work a lot on my other sites – including the blog :)

    July 7th, 2010 at 9:22 am

    Hawaiian Shirt Guy

    Hey E,

    Try to actually sell at least one physical product on your minisites yourself.

    I don’t know this, but I suspect it would possibly, maybe, hopefully pull a site from the realm of minisite to real site in the eyes of Google adsense overlords. Time will tell.

    My latest such site, http://www.bifoldwallet.com

    Just launched, so no rankings yet. May be a good one to follow!

    July 7th, 2010 at 9:35 am

    Elliot

    @ Hawaiian Shirt Guy

    Good luck with the new site. One I am considering (if I don’t sell it first) is BumperProtectors.com. There is no market leader in that space and the costs to produce them would be fairly low. I just don’t have the time to dedicate to another project, especially one this big.

    July 7th, 2010 at 9:37 am

    domainer

    Interesting discussion going on and few names I notice. Josh made his money flipping names and done quit well from what I have learned from others or reading his sales. Luc samething. Alan too if its the right alan I think it is.

    In regards to what Elliot is saying its the catch 22. Elliot where your at now I would say no flaw one bit. You came into the game I believe around 2002 area or 03 and you learned the ropes. Listen to Ron Jackson, people that have learned from bad regs and Elliot im sure you had your share of bad names when you came inn. You learn from your mistakes and realize whats a good name and built up a big list of custotmers, friends, buyers, advertisers and that did not happen over night. Flipping domain names made this happen for you. You think when you came inn you said you were going after burbank.com and lets play the domain game. Wishful thinking and being that young dropping 50k on a name.

    The thing is this. Rince and Repeat. Elliot perfect example. He grabbed bad names early on Im sure of, learned from the mistakes, he bought names for 100 sold for 400. With enough of these transactions it adds up fast for him. So it was tough work and congrats I would say. So he probably made a solid income off his aig job and even with the expensive city he lives, hes stilling do well. All it takes is that one name that you can buy for 5k and sell for 20k.

    So when you left aig you had the freedom to work from home and you busted your ass. This year your doing more things outside the domaining world it seems and still working hard but more of a balance now. You got the domain names you want, your building out the burbank, your pet sites and trying build from scratch. Tough job but your doing it and having a mentor like Fred is a huge help im sure.

    This from outside view and your posts Elliot. For you to say your business model is flawed and most of your income is off domain sales I would disagree. Its the domain flipping the past few years that got you where your at now. You kept rolling the dollars back inn, always upgraded to better names and now generic category killer names. How many 30 year olds can say they do not have a mortgage, everyone getting fired, Im afraid to say this but were headed back in a nasty depression. People are homeless, people cant feed there families, familes living in a car, homeless shelters all filled up. Realize what got you and you worked very hard to get where your at.

    Your realizing things now on the breakdowns and the risk factors. Good and you want to lower that 77 percent down and have other revenue streams coming inn. You got your blog, burbank is now up, your other geo and got some ppc income. You still have your private buyers, you got sellers selling you names and etc. In my view, its the domain flipping that got you here and for you to say your model is flawed how many people can say I did it and judging by your names, websites you did the 1 million all ready. How many people at the age of 65 can say I did a million and house paid off. Look at the numbers and remember where you begun and I look at people at times and be like wtf. I this I that, Im a mover and a shaker now but back in the day they had bad names and yes they have sold names and have done a great job.

    I would say this congrats Elliot no flaw and your realizing the risk factors. Reflect when you were buying names for 8 bucks back in the day. Over time that 77 percent will be going down and it seems your not relying on that one buyer either.

    regards,

    domainer

    July 7th, 2010 at 9:41 am

    Andrew Rosener

    Completely agree! I work my tail off, but the impression that everyone around me has (family & friends) is that I am just kicked back in a hammock in Panama and my business is on auto pilot.

    Definately a major misconception for the modern internet entrepreneur. I would venture to say that we work more than most in other fields (with the exception of probably financials).

    It takes a lot of time and energy to build and implement systems whereby you can remove yourself from the daily operations of your business.

    July 7th, 2010 at 10:25 am

    stephen Douglas

    Looks like El isn’t publishing my funny posts… dang, i spent 90 minutes writing it.

    That will teach me a lesson in trying to write humor in inappropriate locations. dang.

    July 7th, 2010 at 10:36 am

    Elliot

    @ SD

    You crack me up… Frankie is right… I was wonder whose been tailing me for the last few weeks. Bastard!

    July 7th, 2010 at 10:38 am

    byDomainers

    I’m spending 8hours a day in front of my pc and I have a little revenue from my virtual business. My main issue is beginning different projects without finishing them.
    e.g: http://www.byDomainers.com
    I m very optimistic and I know that work will pay hard in the future” I hope ;)”
    Yes, For me virtual business it s a hard work and nothing come without effort and time investing.
    Only if I sell some domains like:
    TurnkeyTurkey.Com
    It will give me a great punch :):)

    July 7th, 2010 at 3:44 pm
    July 7th, 2010 at 11:01 pm

    Priv

    “Looks like El isn’t publishing my funny posts… dang, i spent 90 minutes writing it.”

    Funny? Sorry but it’s very ANNOYING to scroll to skip your posts.

    July 9th, 2010 at 5:40 pm

    Stephen Douglas

    @Priv,

    Oh dear. You had to “scroll” past my post? Did you hurt your finger? Did it take you hours to get past it? (If not, I’ll try harder next time).

    Anyway, you should be privy to this private info that most domainers are priveleged to read, so you’re not supposed to “scroll” past my post. It’s not meant to be private. If you do scroll past it, privation may hit you in your domain knowledge area. You’re supposed to read my posts and learn the truth. Geez. Everyone knows that.

    And… El obviously did post it after sitting down with a six pack, and finishing the whole thing while reading it before “allowing” it to be posted. So there, Mr. Poopy Head. (Just kidding!)

    Now my life’s goal is to make you smile, which means helping you learn how to make money on your own time, without too much stress and cost.

    cheers mate!

    July 10th, 2010 at 5:20 am

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