This is a long overdue post, however, my blog developed some technical issues and I have been a bit too busy to move it to the top of my priority list. I had the privilege of asking veteran domain investor Jason Sheppard some questions about his domain investing, particularly about how he works with investor partners in his domain business. Some of you may know Jason from his Domain Sherpa interview, his Kickstart Commerce interview, and others may know him from his work with Michael Cyger and the DN Academy Accelerator. I imagine some of you know him as Jason the DJ, which is what he is also known for. I am not cool enough to have a podcast (yet), so please enjoy this old-school blog interview!
Name and Title: Jason Sheppard, Domain Investor
Website: I have an info and links page at JasonSheppard.com – we have moved away from having the entire portfolios viewable on DAN but both my personal and the partnership BrandBucket portfolio links are on that page.
How did you find your investing partner and what characteristics should domain investors look for in capital investors? In my case, it was a long-time business associate that I had worked with off and on for 15+ years. We had discussed the domain industry and my partner had occasion to buy aftermarket domains in the past for various businesses he was starting. He saw some of the early success I was having with domains and decided it was something he wanted to get into. The pandemic put a damper on the buying activity for the partnership portfolio, and we have yet to resume.
How do you determine what to buy on your own versus what to buy with your partner? When we are in active buying cycles for the partnership portfolio, it gets first right of refusal on anything I identify as worth going after. I also have a standing offer to my partner to purchase interest in any domains I buy personally, but he has never taken me up on that.
Do you discuss and agree on all of the purchases, or do you have the liberty to make investments as you see fit? My partner likes to have input on all purchase transactions. When we were actively buying, our day would consist of me running a batch of closeouts or drops by him and letting him know what names were in an auction that I thought were interesting. From there, he would express interest in some that I would then bid on. If he wasn’t interested, then I might pursue them personally.
Do you have any established price points or limits? We operate on a case-by-case basis on the buy side. Before each of the past two NamesCon live auctions, we did discuss some desired prices on names that we were interested in. For most online auctions, we are in contact in the late stages of bidding if our proxy is eclipsed.
As for the sell side, I set the BIN prices for most names. If it’s 10x or more on mid-three figure and up names, that is generally where we want to be. Most closeouts and inventory names are priced at a higher multiple than that. I will say that coming in, my partner was looking for a lower multiple until he understood the nature of the business and how the carrying costs of a portfolio impact profitability. I have adjusted our prices accordingly.
Do you both agree on accepting purchase offers or is your investor more of a silent partner in the sale process? For anything that is sold via negotiation, I always consult him about the offers and any counter offers received. We then make a joint decision about whether to sell or hold out for our price.
In an industry where you need to be laser focused to make the right decisions on purchases or sales fast at times, what tools do you use to communicate with each other on the fly? Have you both ever got on a call to close a deal together? We communicate via text mostly. Some of our other business dealings have us meeting face to face 2-4 times per month (yes, even during COVID) and at times we may discuss domains then as well. I can’t foresee a situation in which we would jump on a call together and negotiate a sale, but it could happen.
How do you agree on hold times for the domain names? Have you discussed what you would do in the event that either of you wanted to liquidate a domain for any reason such as a need for cash, but the other did not want to sell We do have discussions about liquidations and drops. I typically do the research and recommendations and run a list past him. From there, he’ll veto anything he feels strongly that we should keep. If I personally needed cash, I would look to my own portfolio to generate that. We haven’t encountered a situation where my partner felt the need to generate quick cash from the portfolio, but if that were to occur, I don’t expect it would be an issue.
What advice would you give someone looking to partner with an investor to invest in domain names? Any pitfall to avoid or anything I didn’t ask that would be helpful to someone taking on a capital partner? Our agreement is casual because it’s based on a long-standing relationship and the fact that there are other things we continue to do together professionally. I would recommend that anyone undertaking this sort of thing look to have a formal agreement that makes allowances for the Capital Partner and the Managing Partner based on the goals of the partnership and the funds and expertise that both parties were bringing to the table. To do otherwise is an invitation to trouble. I realize this is a case of “do as I say, not as I do”, but I think it’s important and I wish we would have done this in the beginning.
Bonus Domain Investing Question – What are your thoughts on using bitcoin for domain transactions either as a buyer or seller? I love that DAN.com pays me out in BTC. It’s a good way for me to dollar cost average my crypto holdings and I have benefitted from the recent crypto run up. I have yet to purchase domains using BTC but I could easily see myself doing that in the future.
Thanks again Jason!
Since this interview, I have brought on a few investors myself and I will share about that at a later time. If you have worked with investors in your domaining business, feel free to share in the comments, or reach out to me to do an interview.