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We
are going though unchartered territory
and all comparisons with the Great Depression
are misplaced but understandable. It was a
different world then with much less opportunity
and 1/100 of the tools at our disposal today. If
you look at the headlines of 2008 you would find
that 100 stories could vie for the biggest.
Electing the first Black President, GM on the
edge of bankruptcy, AIG bailout, Lehman
Brothers, Merrill Lynch, Bear Stearns. Wachovia,
WAMU, CITI. Madoff, Blago, Spitzer. Then add the
stock market crash, housing crisis, credit
crunch, pirates, Russian invasion of Georgia,
wars in Iraq, Afghanistan, Gaza and tensions
between Pakistan and India. Look what I left
out. Israel, Iran, China, North Korea. See how
hard it is to mention one thing without taking
the time and space to mention the other things?
You folks can add dozens more. Any one
of these events in a normal time would be
huge. Together and all at once is really
something hard to get your head around.
| There is a difference
between a downturn and a collapse. The
difference between a plane descending and one in
a tailspin and completely out of control. We are
witnessing both at |
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once. Then add in
massive layoffs, corruption, no confidence and a
world in an informational transition between two
eras and we have what may become the
perfect storm. You cannot sugar coat what we
are about to experience. Usually things like
this are contained to a geographic area or
region or a sector. This is worldwide.
This is hitting every corner of the globe. This
is something we have really never seen before.
We are living in a very vivid part of history.
What does this have to do
with domains? Everything. You can’t be
in the domain business and not be plugged into
“Generic” business and world events.
“Business” is just not domains. Domains are
merely a vehicle with diversified facets
that make it like real estate or an investment
or an oil well, or a collectible or a limited
and specific commodity or a host of businesses.
But domains without being plugged into business
are really nothing. Many of us are in many
sectors and therefore |
| many industries. We have
our ears open to them specifically. So while we
have a layer of protection around us, it is the
general economy that will dictate our immediate
destiny. That is where our picture brightens
in the midst of all this darkness.
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As a rule, I pay particular
attention to things that happen at the end of
the year as well as the beginning of the year.
Truths are revealed then and even more truths
come out during tax season. So in business I see
key points in time during any year that I pay
particular attention to. While there are many
issues I could bring up that are certainly
worthy of discussion in 2008, the two that pop
out at me are things that happened or manifested
itself in December.
These are earth shaking and
game changing movements that have long term
impact. The decision for Google to deal
directly with domainers is a big deal. It
is a policy change that will have an impact as
we move forward. Maybe not the impact on the
domainer time frame, but certainly one if you
have a long term view of the space. The seed has
been planted. This shift sends a number of
signals and open things up in a dramatic way.
Getting rid of worthless and crappy traffic and
TM infringing traffic is key to thriving in the
future. Results are going to be in vogue for a
change and I see that as a great thing. When you
take out the garbage, you can bid more on
traffic that has a better potential of ending in
a sale and a new customer. The value of a new
customer has been totally off the mark when it
comes to the Internet. It's more than just one
sale. The lifetime value of a new customer can
be worth thousands. Tens of
thousands….Hundreds of thousands….Millions.
And folks are trained to pay a nickel or a penny
or a fraction of a penny and in many
cases they treat their new potential customers
like coins.
| If they paid $10 for
a new visitor I think they would take them
much more seriously. The point is there is so
much room to improve selling on the
Internet that it could take many years for
retailers and wholesalers to understand the art
and science of making a sale on the |
| net. The
principles on the net are identical to offline
except the customer is willing to do all the
work leaving the business to do the fulfillment.
Online the customer says to the business
owner….”Don’t get up, I will serve
myself” The customer will go through the
inventory. Look to see if it is in stock. Will
go to the cash register and even put in the
money. All without the help of the business
owner or any employees. The business just has to
ship the goods in a timely manner.
I think the second thing
and perhaps the bigger of the two is something
that started years ago but illustrates the many
facets of the Internet. For literally hundreds
of years we have been getting our news in
printed form. Much of that time in newsprint.
The newspaper has defined generations.
Tracked history on a daily or weekly basis
for generation after generation after
generation. In 2008 that method of delivery all
but collapsed. Collapsed like a cheap card
board box. One of the single oldest
mediums met its' fate |
Schwartz
with Barbara Corcoran, the keynote
speaker at T.R.A.F.F.I.C. New York
2008 |
| in 2008. Some
are still printing yesterday’s news
and that will continue for years, but
less and less people are buying
yesterdays news nor are they advertising
there using yesterdays news as a base.
Folks get news all day. They can filter
out what they don't want and filter in
what they do. Other mediums are not
immune. The Internet has displaced the entire
economics of the world which was greatly
accelerated by everything that went on
for the last few years.
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What happened in 2008 had
less to do with domaining and more to do with
collapse of everything else. Domaining and our
corner of the planet stood stubborn in a tide
that was going down. Every corner of business
was stung with scandal, ponzi schemes and people
in position of trust that took us all for a
ride. Mix that in with the housing crisis,
$150/barrel oil, $1000/oz gold and you have the
makings for turmoil like none of us have ever
seen before. There is so much blame to go
around, where do you even start? Maybe
some public hangings? Payouts may be down, but
that is a market and a market goes up and down.
Most businesses are suffering a deep systematic
decline. Many will never recover. Any decline in
domains is temporary as it is market
driven. The foundation of the industry is strong
even though you will see a number of folks
disappear.
That brings me to the #2
question about 2009. The Internet is going to
grow and thrive. On the other hand many will
pull back. Even more are just going out of
business. I am the eternal optimist as
many know. But 2009 is going to be rotten for
many and great for those who can exploit
the new normal. 2009 is a year to be very
careful and bold at the same time. It will be
riddled with pitfalls and opportunity and
folks not holding up their end of the deal. Desperation
is coming to a neighborhood near you this year
whether it be in your home town or on the
Internet. As they say "Trust but
verify" as scams will be on the increase.
| You'll have to be more
than a domainer to thrive and survive 2009.
Opportunity may be in domains. But it may be
elsewhere as well and blinders have no place
in 2009. The space is going to flourish in 2009.
Branding is no longer in vogue. Sales are!
What is the difference |
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you ask? Branding is a
feel good message that barely mentions the
product. Advertising is in your face cold hard
offers. "Buy this item for $14.95 by
midnight". It can be measured. Measured in
sales and profits and whether it is worth doing
again. As I have suggested numerous times....the
ultimate branding is more sales. In 2009
there is no room for branding. As I wrote in a
December blog post, Branding is dead in
the way Madison Ave approaches the
subject. Just look at the graveyards of
“Brands” that Madison Ave. brought you over
the years.
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There is room for more
sales and THAT is where the silver lining comes
in and why domains will continue to be strong
assets with increasing values. The next wave
of a boom economy will pay the biggest dividends
to potent traffic. Sales, sales,
sales.....nothing else will matter more. The
problem with so many companies is they are no
longer sales based. They have gotten caught up
in branding and ego stroking to the point of
collapse. If you enter 2009 and you have a force
of of branders and order takers and not hungry
sales people, your days are numbered. Selling is
an art. It is strategic. It is personal. It is a
skill developed by studying human nature. A
skill developed by trial and error. A skill
developed by role playing, A skill of presenting
an item to a skeptic and making a presentation
to win them over. Like a lawyer addressing a
jury a salesman’s job is to overcome
objections. As long as a potential customer is
objecting, even if he is screaming and ranting,
he is still a buyer. Most don’t know or
understand this. They are too busy getting
offended. There are fewer places to learn
about sales, to develop those skills. There are
no formal sales education in schools and
universities. It's on the job training and if
there is no one to train you it becomes
exponentially more difficult. Selling is about
creating desire, educating and things that it
would take months to describe and years to
learn. Most of the masters of selling are dead
or don’t have to sell anymore.
2009 has the potential to
be catastrophic for many millions of
people. It will cut across all economic levels.
Nobody is immune. The strong will survive and
thrive. The weak will just disappear. The strong
with lots of employees and overhead that are
carrying a lot of debt and burden will be
restricted in their dealings and may not make it
either. Growth will give way to survival.
Treading water at a time like this is a great
victory. Losing 10% of your business is not
going to sink you. Losing 20% is going to make
life uncomfortable but survivable. 30% or more
and you are likely on life support and each
passing month will make you even weaker. Many
will just fade away, some without much fanfare.
But the strongest sector is ours and for
that, we should be very thankful.
| This is not our first
downturn or economic collapse and this won't
be the last one. But this one is as serious as
it gets and it is likely to change our way of
life for several years. Support the businesses
you want to be around. Whether it be your
favorite restaurant, watering hole or the
cleaners you bring your clothes to. Many of
these businesses have disappeared or are about
to. The fallout from millions losing their jobs
has yet to register. The impact of that
is just starting to manifest itself and that
alone will lead to even more layoffs. The thing
to watch for is shortages and that is already
happening and will get worse. |
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| First you have a
glut of goods and retailers are anxious to get
rid of everything so they don’t get stuck with
too much inventory. But that leads to shortages
and that is something to really pay attention
to. In 2008 the big shortage was cash. In 2009
it will be cash and goods and maybe even gas.
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Lack of confidence is
the prime problem and I see no reason to
have much confidence at this point. When they
passed the bailout package in November, they
raised the FDIC limit of insurance to $250,000
per institution. I think it puzzling that on
December 31st 2009 that insurance expires and
reverts back to $100k. To me that is a red
flag. Yes, they may extend it, but you
certainly have to ask why it was not permanent
to begin with? One thing about 2009, the
industry will be influenced by things beyond
our control whether we like it or not. We
are at a tipping point. It could tip either way.
But so far the evidence is weighing on the wrong
side. Heavily on the wrong side. Much more to
still be discovered. This has the potential to
be a devastating period for many. I believe that
some parts of the country may be wiped out. With
factories closing and little hope of them ever
reopening the basic foundation of many towns
have been completely disrupted. Unless they have
some diversity, it is a downhill spiral of
events.
Whatever happens in 2009
and 2010 is going to be one hell of a challenge
for billions of people around the world. The
Internet emerges as the winner at every point.
The struggle between the old economy and the new
economy had its first face off during the 2002
collapse. The old economy held on. Mostly by
spreading rumors that the Internet was not
secure and shopping online was risky. They BRANDED
that lie and many swallowed it. That dog
won’t hunt this time. This time they will
try again but folks know better. This time folks
know, understand and use the Internet all day
every day. This time it won’t work. This
time the Internet has won and the old
economy needs to make the adjustments or get
washed away. There will be no bailout package
for blacksmiths. There should be no bailout for
those that can’t survive. The jig is up and
the game is over. There will be a significant
consequence for giving away trillions of
dollars. We will have a short “Feel good”
type period and then the worst will hit. Too
early to tell how that will manifest itself. It
won’t be pretty.
|
Schwartz
with Forbes Magazine
publisher and
former U.S. Presidential candidate
Steve Forbes |
The one thing about 2009 is
that domains may be our vehicle, but it is
business outside of domains that should
be the focus of 2009. Domains and the Internet
are entering the age where they will both be
recognized and take their rightful place.
Domains have always been the real estate of this
new era. It takes a collapse to have folks
realize it. When they finally turn their
attention this way, and they are about to, a
new order will emerge and we are about to
find ourselves on the top of the world.
There will be tough sledding ahead, but I am
here to tell you, we are entering the final
phase of a 20 year plan. A phase that has been
accelerated by the very thing we all fear.
If times were always great
the Internet would never assume its proper role.
With what is coming, it is going to assume that
role in a much faster and more dramatic way.
It is a life raft in a sea of sinking ships and
the naysayers we have battled |
| have finally
realized it. So 2009 is gonna suck really bad
for many. It may become the single worst
business period in recorded history. Many in our
sector included. The life raft is not a place
for comfort. It is a place of survival. Those
that survive 2009 and 2010 will rule the world.
Personally I go into 2009 knowing this will be
the single BEST business environment I have EVER
seen. The BEST. Folks open to work
together, to try things, to roll the dice. Those
that do things in 2009 will do big and bold
things. They will taste success over and over
again. Tough times create the greatest
opportunity.
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As for domains, it all
comes to the individual circumstance. Domains
will remain strong, however some
domainers won’t. That is the circumstance
that will drive the aftermarket in 2009. Plus I
think you will see new types of investors come
to the table because of 0% interest on
their money, safety and both the housing market
and stock market in crisis. I think until people
have confidence in the people in position of
power, this will continue to spiral downwards.
That’s the way I see it. As always, time will
tell.
PS: In the interest
of full disclosure. While I used the “Life
raft” analogy above, the truth of the matter
is that we are all on a cruise ship and
they are all going to want a piece of what we
have. Never underestimate how valuable what
we have is. Never doubt it. If you are sitting
with quality generic domain names that receive
daily traffic, you are covered. For those
getting eaten by registration fees, this is an
opportunity to start over. Dump thousands and
buy dozens.
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