Domains were the new gold

In 1994, Gary Kremen registered sex.com for $0, and in 2006 he sold it for over $12 million¹.

But it wasn't just NSFW domains that became gold out of thin air. Hundreds of early domain investors (a.k.a. domainers) registered dot coms for tens or hundreds of dollars—and in many cases for free—then flipped those domains for five, six, seven, and even eight figures.

Last week I read David Kesmodel's book about domain investing, The Domain Game: How People Get Rich From Internet Domain Names. It was published in 2008, and I bet many people who read it around then would have said the domain gold rush was already over. One book reviewer on Goodreads wrote, "this book made clear to me that the domain game is pretty much over." From the book:

Each of the 676 possible two-letter combinations and each of the 17,576 possible three-letter combinations was taken by March 2006...Each of the one thousand most common English words was registered.

I wrote last week that the .com domain is already taken for all 2,315 words in the original Wordle answer key. And that includes some pretty bad domains, like wooer.com (on sale for $30k if you want it). Solo domain investors bought all these "good" domains starting in the 90s, and sophisticated institutional investors spent hundreds of millions in the early- to mid-2000s on domain portfolios.

So it's too late. It's a common feeling—that you've arrived too late. Marc Andreessen talked about arriving to Silicon Valley in the 90s and feeling like he'd missed it because the PC revolution had already happened (...but the Web was just getting started, of course).

Ok, those two- and three-letter combos and the top thousand common English words were all taken by 2006...for .com. But now there are hundreds of other top-level domains (TLDs). You can buy hat.world for $200 right now, for example—no one has registered it yet.² So maybe it isn't too late.

The real estate metaphor is useful, I think. Investing in New York City real estate in the year 1990 would have already been both competitive and expensive. Over seven million people lived in NYC at the time, but less than a million lived in Shenzhen, China. Now Shenzhen has a population approaching 20 million, and its real estate market is commensurately expensive (broadly speaking—I don't know much about real estate). Maybe NYC is the .com here and Shenzhen is .ai (the second hottest TLD this year, according to reported secondary market domain sales).

Real estate isn't a perfect metaphor, of course. It starts to fray when comparing the finite land in the world with the near infinite set of possible domains. Introducing new vanity TLDs like .land and .xyz affects the value of existing assets, like dot coms. Would you pay $75k for bananabread.com when you could buy bananabread.shop for $550 or bananabread.kitchen for $10?³

It's tricky trying to make sense of a (relatively) new asset class. Emerging investment opportunities often resemble predecessors, but there's danger in overfitting old mental models and strategies. Like, just look how controversial cryptocurrency has been over the last decade. I'm more or less a novice when it comes to investing, but it's way too important to the story of domains to ignore. I've never been a professional investor, but some of you reading this have or are. Reply! I'm excited to learn about this world and make sense of it all.

In my research and in the book I'll explore where domain investing is now as an industry and asset class. I'll cover its (sometimes shady) history, like registrars getting high on their own supply (i.e. buying domains before the customers they serve can buy them). I'll experiment as a domainer myself, building my own small portfolio and publicizing my rationale and results. I'll talk to investors, registrars, registries, and journalists in the domaining world. To that end, reach out if you have stories to share, questions you want me to pursue, or people I should interview (including you), and forward along to any friends or coworkers who you think would be interested.

Footnotes

(1) Btw, no need to follow your curiosity to the browser—sex.com is exactly what you think it is. I'll cover the NSFW underbelly of the domain world (porn) in the book. It's not something domain investors necessarily want to associate with or talk about, but it has been too lucrative to ignore.

(2) If you're wondering why $200 and not $10, it's because .world is a "premium" top-level domain (TLD). Domain registries (different from registrars) bid for TLD rights in auctions and can then charge what they want in turn. A company called Donuts raised over $100 million to buy the rights to .world and many, many more TLDs, like .email. I'll cover how TLDs work in the book.

(3) Those are all real asking prices as of today, August 8th.