Words Of Wisdom – Domain Investing

Going through some old research, I happened to re-read this excellent interview that the well-respected Giuseppe Graziano from GGRG.com did with industry legend Nat Cohen earlier this year.

I’ve had the pleasure of meeting Nat in person at NamesCon in Las Vegas some years ago, and he is one smart dude and a genuinely nice guy. Prior to this, I had also purchased a 3L dot com domain from him on behalf of a client.

Before I bullet point just some of the responses Nat gave to Guiseppe, I would say just one thing. There is probably no more ferocious defender of his domain names than Nat Cohen. He often opts to bypass any UDRP and head for the Courts (where he makes “rustlers” pay for their transgressions). Domainer actually highlighted this 4 years ago. Good on him!

Nat Cohen Observations (courtesy of Giuseppe Graziano)

  • The advantage of starting now is that you are entering into an already thriving market.
  • Businesses now “get” the importance of having a quality domain name. Demand for domain names and acquisition budgets have never been higher.
  • There is also now a wealth of expert advice and a tremendous number of resources available to new investors to help them avoid losing money through costly trial and error mistakes.
  • Another way that beginning investors can get tripped up is by focusing on the return on investment (ROI) of an individual sale, rather than the ROI of the investment in the entire portfolio. Buying a domain name on the drop for $100 and selling it three years later for $5,000 sounds like a hugely profitable win. But if that’s your only sale and you’re sitting on 99 other domain names that you also paid $100 each for and renewed for two years, then you’re facing a large cash deficit, not even taking into account the hundreds of hours of your own time that you devoted. 
  • If the quality isn’t there, domain registration can be a losing game. The only business that is guaranteed to generate revenue from your domain registration is the registry … (Domainer edit: for Australia include auDA and your local registrar).
  • If you are winning names at high profile auctions, then you are paying more than anyone else in the industry is willing to for that domain name – which isn’t a great way to start. (Domainer edit: There is currently only one drop catching service in Australia (Drop), and given it is a tiered auction system which is first in, best dressed, this is not necessarily so.)
  • My focus has been primarily on “brandable” rather than “keyword” domain names. Both approaches work, but the first one comes more naturally to me.
  • When evaluating a domain name, I ask whether I could imagine a business wanting to choose this domain name as the name for their company. Most of the time, the answer is “no”.
  • Owners of keyword domains can productively do outbound marketing, while that’s usually pointless for owners of “empty vessel” brandable one-word dot-com domain names, for it is nearly impossible to identify prospective buyers in advance.
  • I’m forced to be patient. Many of my sales are domain names that I’ve held for over 20 years.
  • There is no guaranteed right to invest in domain names. Some countries effectively ban domain investing in their ccTLDs. Many influential people involved with the Internet would like to shut down or scale back domain investing. The industry still has to combat outdated views of our business as “hoarders”, “squatters” and “parasites”.
  • The domain governance system is structured so that it is not accountable to registrants – or to the general public. At both ICANN and in the UDRP the system is controlled by folks who, in general, have a negative view of domain investors.  They have the power, ability and inclination to weaken our rights to our domain names and to impose restrictions on how we can operate.    (Domainer edit: substitute auDA and auDRP)
  • No business is entitled to a non-distinctive domain name, even if they chose to build their brand on a non-distinctive term.

This next one is my favourite – so I have bolded and coloured it!

  • Speculation and investment occur in every asset class and domain name investors should not be singled out for criticism. There are many domain registrants besides domain investors who want to take advantage of the domain aftermarket and who engage in the profitable resale of domain names, from a huge corporation who no longer needs domain names obtained through the acquisition of other companies, to a small business owner who is retiring and wants to cash out of a valuable domain name.
  • I think the perceptions of the domain industry are gradually changing for the better over time as people recognize the resale of domain names as a normal business activity and as an ever-growing number of people and businesses engage with the domain name aftermarket and recognize domain names as valuable digital assets.
  • Whenever you register a domain name you are forced to swallow a bit of poison that could prove fatal. The bit of poison is that you are agreeing that one or more of a group of people throughout the world, appointed through a hidden process by various unaccountable organizations, can terminate your rights to that domain name if they determine, according to vague and subjective criteria, and at their sole discretion, that you registered and used the domain name in bad faith. (Domainer edit: include auDA first and foremost)


Thank you to Giuseppe for doing this interview with Nat in the first place. In my opinion, any serious domain investor should read (or re-read) it.

As always, Domainer would be interested in your comments and observations from an Australian perspective. 🙂