Elliot’s Blog has an interesting post today where he states, “it’s better to have many smaller successful sites that require less time and effort than one large one that doesn’t earn enough to make you a living and can’t be scaled.” My perception is that Elliot is trying to move from a high margin business which is tricky to scale (domaining) to one with lower margins (development), which has the challenges of managing outsourcing/hiring to make it scalable . Then, per his post, within development he is trying to find the the best business to scale at decent margins.
There are those that manage to profitably scale domaining (Latona etc.), there are those that manage to profitable scale a single geo-domain, and there are those that live off mini-sites. The margins in each are different, but it is the leaders in each of the markets that make the most money because they have achieved scale. The key is being good enough to scale something!
I think domainers perception of profit is sometimes skewed by the fact that they underpaid for domains and have a lower than market value cost basis. They may think they are solid developers, but their true smarts are in getting domains at the right price. Any truth in that?
I look forward to seeing which path Elliot Silver decides to follow. If you think about it, if an e-book on parrots can make $400,000 per annum isn’t tropicalbirds.com the real goldmine if scaled? Or if you look at the Burbank advertising market size isn’t Burbank.com the site that deserves to be scaled? Or considering the Jewish population worldwide isn’t it Torah.com? Could any one of these domains make millions if scaled?
To me it seems that Elliot’s business model is evolving to value-add domaining, where domains are developed to show their potential and are available for sale on a multiple of future rather than current earnings (tropicalbirds at $45K when it makes dollars a day in AdSense). That in itself could be the business that he can best scale at the highest margins.