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06|25|2007 12:57 pm EDT

How to create a liquid (domain) auction and market

by Mike Mann in Categories: Domain Aftermarket, Editorial, Events

Mike MannDomain Name News is proud to include Michael Mann as our first guest contributor. Mann, a pioneer in the domain space, sold his company Buydomains.com to Highland Capital and Summit Partners in 2005 and continues to generate buzz in the domain space with his latest venture capital firm WashingtonVC. com. Mann is also the Chairman of the Board of Grassroots.org.

  • First you take an existing inefficient market and review its weaknesses. If it is not free, fair, and open, it is not efficient; fewer transactions are conducted, smaller fees are collected, plus less press, social impact, and economic opportunity is created. Therefore it is critical for leading market participants to work in concert to create a truly (almost) efficient marketplace.
  • Put the very best assets that can be culled from your community in a public auction. Any assets not voted to be the best of the best in advance should take a back seat in a back room.
  • Make sure the reserves and ranges reflect the realities of the market, again as voted by its top participants in advance.
  • For example at auction last week cardiology.com, bald.com, carsales.com, locals.com, spices.com, clock.com, psychologists.com all sold. All are great generic .com names that had reasonable reserves, apparently fair bid processes in these cases, and reasonable sale prices, making the market look solid. All names on auction should be equivalent in those respects. There is no shortage of inventory, just in the confidence of potential buyers and sellers, and imperfect information across the spectrum.
  • Make sure all the participants are perpetually tuned in to their PR agents and surrounding opportunities; invite lots of relevant press contacts to all events well in advance, with bait.
  • Cheer each other loudly in public every time and spread the word. Otherwise the press sees rooms (and sites) full of computer geeks making money which is hardly noteworthy since they don’t have any idea what they are really seeing. Conversely, with public cheering of all sales, they will sense energy and excitement and reflect that to their media, which will create a virtuous cycle in the marketplace, and with each successive auction.
  • No shill bidding or bidding by people who know the reserve wont be hit.
  • Conflicts of interest resolved in advance to leave confidence for new market entrants. The more market players, the more efficient and effective every market becomes.
  • Clear rules followed by auctioneers and auction players. Again the object is to build confidence for new and old players in order to build a big efficient market.
  • A deep and well documented program as described above, with everyone operating in good faith, will enable significantly more domain transactions from sophisticated investors.

In conclusion. If TRAFFIC auction follows this protocol I bet it will do $25M next auction, and that will be so successful and get so much press the next will surely do $50M; on and on in a perpetual cycle.

LMK your thoughts

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Mike

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3 Comments

Bill Henson

June 26, 2007 @ 12:31 am EDT

An excellent gameplan. The hurdle of successfully infecting the media with the desired attitude and resulting copy is worth the price of admission.

Rob

June 26, 2007 @ 4:23 am EDT

Excellent rules and regulations that will need to take place at domain auctions. Said professionalism and honesty in the part of the auction promoters and bidders will help the public and future potential buyers take the growing domian name more seriously. This in turn will help the industry keep growing.

Used Laptop

December 18, 2008 @ 8:17 am EDT

The market of domain is increasing and i think with perfect planning and professionalism it will reach to new heights.

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