Domain Investing or Domain Lottery

Domain speculation is nothing more than playing the lottery, right?

I answer this question at least a dozen times a year when asked what I do for a living and answer that I’m a Domain Name Strategist and Investor.

Most reply, “Oh, domain name squatter, huh?”

Which then leads us down the domain investing education path of the difference between a squatter and investor.

And without fail, I always share the parallels of physical to virtual real estate comparison while driving the point home typically using the person’s residence as prime example.

By then, the light bulb is on for most and they began to understand just how foolish their assumption exposed their lack of understanding and knowledge.

But then are those persons who take it one step further and say, “Well, you should just play the lottery if you going to speculate on domain names.”

Which this comment allows me to further explain the difference in spending versus investing.

Of course, speculation is nothing more than the forming of a theory or conjecture without firm evidence.

Typically, speculation is categorized as investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.

Once defining speculation or bringing general definition to the claim and comparison made between domains and then lottery, I share the following insight.

For instance, right now the Texas Lottery, specifically Powerball® Jackpot, is currently worth $337 million dollars ($209.1 Million estimated cash value) as the most recent powerball winning numbers were drawn May 31st with a power play of 2.

At the time of this writing, no one has come forward to collect their massive winnings of millions with the next drawing happening tomorrow and every Wednesday and Saturday to follow.

In fact, it’s highly likely that the jackpot will continue to increase although based on Powerball® Winning Numbers this year a winner is about due.

Personally, if I were to play the lottery (which I don’t), I would decide to aim to reduce my risk with firm evidence even though I don’t control the future outcome. How so you ask?

For instance, I would focus my efforts on the following to reduce risk and increase my odds of winning:

  • Identify how many outlets sale tickets in Texas
  • Out of the dataset, identify which outlets have produced winners over the last 1-3 years
  • Out of this subset, identify which days and hours tickets were purchased
  • Set a not-to-exceed purchase amount based on likelihood of outlet past and extrapolated future winnings
  • Out of this subset, figure out demographic differences and similarities between winners
  • Finally, use the data to locate persons and outlets, and pay the person a flat-rate fee to invest not-to-exceed amount on my behalf

Now granted, this is simply a rough thought of how I would likely INVEST to REDUCE RISK, yet INCREASE ODDS of winning.

This method, although not fool proof, is light years ahead of blind hope or dumb luck lottery ticket purchasing, right?

One method is focused and targeted while the other is simply the shotgun approach.

As it pertains to domain names, I INVEST my efforts in the same sort of theory and tactics although I use different criteria than IF I were to play the lottery.

That’s why I think it’s telling and interesting when I stumble upon exchanges like the one today:

It’s no secret that new gTLDs and emoji domains have garnered a trove of speculators expecting to make riches in the niches while not achieving or mastering sales of long standing .com, .net or even .org extensions.

Exchanges like the one above are clear reminders of the importance of doing your homework before blindly hoping and spending on domain niches without any evidence.

Whether you choose to buy or pass on domain niches should always be backed by and with data beyond someone giving you their opinion to be a bear or bull.

It’s easy to get wrapped up in the glamour and glitter of someone else’s success without having all the necessary and identical factors used when making their decision.

You MUST ALWAYS do your own homework. Consider sales or lack of sales data for the chosen domain niche while also checking the registration availability in other extensions or related keyword extensions.

And this is just the beginning.  At times, I feel as if I’m Google executing the numerous search ranking factors when deciding to set, cap, and invest in a given domain name or niche before investing one dollar.

So, the hope for some is that emoji domains, new gTLDs, and any other niche are proven to be a successful and profitable investment.

Again, it’s a hope for some and not for others.  And just because you don’t have data doesn’t mean that someone else doesn’t. 😉

I agree with DomainSherpa in saying until you have finite data and evidence, then you’re likely wasting time and money speculating in hopes of hitting the domain name jackpot with ever increasing risks.

Are you spending to play the domain lottery or soundly domain investing?

Written by Alvin Brown
He's an experienced and passionate serial entrepreneur, founder and publisher of Kickstart Commerce. Alvin possesses a great love for startups dominating their market using profitable digital strategies for greater commerce.