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What to expect from Epik in 2011: Outlook, Predictions, Principles and To-do List

By January 2, 2011 February 28th, 2017 5 Comments

Happy New Year!

In a blog post last week, I outlined the main achievements in 2010. Although our first full year of operation was not without its challenges, overall it was a productive year, particularly for a young company that has yet to take in institutional capital.   This post summarizes my macro view of the state of the internet real estate industry, shares a few predictions, and outlines Epik’s main development themes for 2011.

The Macro View on 2011 – Online Real Estate is well-positioned
My enthusiasm for domains as an asset class has never been stronger.  Traditional domain speculators who relied on parking as an economic model are giving way to a new generation of online real estate developer.  I have met with both groups.  The demographics are different. Some courageous old-time domainers have already made the leap to development — guys like Rob Grant and The Castello Brothers. However, the majority of long-time domain owners appear content to watch in frustration as their gross revenue from PPC converges with their domain renewal costs.

Fortunately, the growth engines for online real estate are plentiful.  Here are three main growth drivers for 2011 and beyond:

  • The Internet is outgrowing the offline economy: While the offline economy continues to shrink, the online economy is having a second boom as a growing number of deep-pocketed companies accelerate growth through organic investment and through acquisition. At the same time, new
    companies will need the raw land on which to develop their Internet presence.
  • Domain Development is going mainstream:  A new generation of domain owners is embracing domain development.  The tools with which domains can be turned into viable economic engines are rapidly maturing. This opens up domain development to a much larger audience of developers who lack the technical expertise that was traditionally required to develop a commercially useful website.
  • Investors are on the hunt for alternative investments: The top-performing investments in 2010 were predominantly commodities, notably precious metals and rare earth metals that are valuable, rare and portable.  Investors are becoming increasingly aware of the growing risks to conventional currency systems. More and mre of these investors will see the merits of domain names and internet businesses as an alternative investment class.

The composite of these themes are incredibly bullish for development-grade domains, particularly domains that already have a head-start at development.

Predictions for 2011
Well, it is the New Year, so with that I will offer up a few predictions about the year ahead. The first 3 are specifically about the domain world. The last 3 are about the world at large.

  • The .com premium will fall:  During 2010, Epik’s .net domains earned more than our .com portfolio — not just in total, but on average.  Just as silver is under-priced relative to gold, .net domains and other TLDs are under-priced relative to .com.  The old-timers don’t want you to know this, but you get 10-100X more bang for the buck by buying the hyphenated .com or .net name. I expect that pricing gap to begin closing in 2011.
  • The daily drop lists will continue to get bigger and better.  As predicted back in August 2010, the double dip is in progress. Measured in gold, US GDP shrank about 20% in 2010. With 77% of Americans living paycheck to paycheck, the mainstream economy is still in the tank. This will result in more distressed portfolios being liquidated or dropped as the pool of traditional buyers find it increasingly challenging to sell to traditional buyers.
  • A major domain portfolio will be acquired: The race is on to control the web. Google is making the boldest moves: (1) vertical integration of content (e.g. Boutiques.com, GroupOn bid), (2) integrated provisioning of services (e.g. becoming an online travel agent), (3) proprietary web access  (e.g. Android, Chrome, Google WiFi). Direct navigation is still fragmented and as such it remains a threat to Google.
  • Corporate Acquisition Boom: Venture Capitalists are expecting a big 2011.  Why? For one thing, Corporate America has more than $1 trillion in cash sitting on the sidelines.  Moreover, the environment for debt issuance is favoring corporates as sovereign, state and municipal debt looks increasing less attractive as a store of value.  For Corporate Treasuries, the risk of omission (do nothing) is now greater than the risk of emission (do something).
  • Inflation is here and it is accelerating:  Endless fomenting of currency by central banks will come to head in 2011.  The sudden realization by the public that their cash-based wealth is being inflated away will lead to a mass exit out of cash and into hard assets.  When that happens, there will be too much cash chasing a finite amount of hard assets, resulting another explosive growth year for Commodities and Alternative Investments.
  • More volatility in everything:   The word for 2011 is Volatility: volatile markets, volatile currencies, volatile weather, volatile plate tectonics, volatile public policy, volatile public sentiment. Simply stated, the world is unstable. Attempts by policy makers to stabilize it may have unintended consequences.

The stage is set for 2011 to be a year of inflection — a year when the course of history changes.  This would be a good year to be vigilant and diversified. Consider having some extra supplies on hand — see EmergencyFood.com (a fast-growing eCommerce store powered by Epik).

Some Guiding Principles for 2011 and Beyond
In times like this, it is hard to lay out an exact roadmap for the journey ahead. That said, it is possible to articulate some guiding operating principles.  Here are my top 7:

  • Combine the Three C’s — Content, Community and Commerce:  The most successful sites bring together multiple elements of user experience.  They have (1) compelling content, (2) an engaged user community, and (3) an economic model that provides attractive value for money while still generating a profit.  We are working to bring all 3 components to every site in the Epik network.
  • Encourage owner Engagement:  The most successful sites have some element of personality for the simple reason that consumers prefer to buy from a brand that they can trust.  Even IceCreamMaker.com has a story — a story about Kenny who loves Ice Cream. I wish Kenny would add a picture of himself enjoying an enormous banana split! Hands-on owners are key.  We are providing more practical ways for owners to be engaged.
  • Create Network Effects: Epik is, in effect, a network of networks.  Product portals is a network of more than 11,000 comparison shopping portals.  The sites in the network are linked to each other based on semantic relevance.  As data becomes more structured, the opportunities to create logical cross-links between properties increases.  By the same token, as the network of Developers grows, there are more efficiencies and synergies.
  • Make it affordable to get started:  A key design principle from Day One has been to make development affordable. We keep our costs low and pass savings to Developers who want to build with us. We win when our Developers win. Custom sites start at $249. The EpikWiki platform is literally free.  We also drop-catch for free. Beyond keeping costs low, Epik pioneered the practice of exchanging domains for development work.
  • Communicate openly and transparently:   The Epik Blog is an important communication tool for the company.  In addition to the blog, in late 2010 we began doing regular newsletters that provide operating updates and instructional how-tos. The company’s internal messaging platform is Skype — we openly share our Skype addresses with Epik Developers who want direct access to Epik staff whenever we are online.
  • Stand behind the product:  When Epik takes on a development, we do so because we believe that a given idea has a right to succeed. That does not mean success will be easy or instant.  In some cases, a development won’t go as planned or a Developer is not a great fit for Epik.  When that happens, we try really hard to make it work for the Developer, one way or another. Almost always, there is a win-win and a path forward.

The exact to-do list at Epik will evolve. The operating principles that define the to-do list should remain fairly constant.

What will Epik be working on in 2011
If 2010 is any indication, 2011 will be a year of rapid innovation at Epik.  Moreover, with a large and growing network of developers engaged in the daily dialog around how to improve, there is a lot more intellect and energy at work on Epik in 2011 than there was in 2010.  Here are some of the main themes that we are focused on in 2010:

  • More Platforms in More Places:  A core aspect of Epik’s development approach has been to use platforms — essentially toolboxes and work processes that are tailored to a specific task.  In 2010 we scaled Product Portals and launched eCommerce, Directory Portals, Video Portals, Lead-Gen Portals and Recipe Portals. Each of these platforms are continuing to be improved, often with dedicated development personnel. During 2011, we plan to roll out platforms for Job boards, People search, Multimedia chat rooms, Real estate and Financial News.
  • Portable Identity, Portable Reputation, Portable currency:  One of the great challenges of building content into a federated network is that there is more friction when traveling from site to site.  Epik is in the early stages of delivering on the vision of what we have been calling “The User-Centric Semantic Web” — a network of sites that are seamless and interoperable as you go from site to site. During 2010, Identity.net began to appear on the Epik network for single-sign-on.  During 2011, we’ll add a single network-wide currency and central payment gateway to the Epik network.
  • Efficient Marketplaces for clearing Inventory of Development-grade Domains and Developed Sites:  In 2010, the SwapFest Dutch auction proved to be an effective method for clearing large amounts of inventory.  In early 2011 we’ll launch an online edition of SwapFest. Beyond SwapFest, suffice it to say that the existing solutions are woeful and there is a lot of room for innovation in the world of auction and brokerage.  The question is not whether we will add value in the area of selling Developed sites. The question is whether we will Build, Buy or Partner in order to get it done.
  • Domain Lifecycle Management Tools: Our first foray into domain portfolio management is visible at admin.epik.com.  The existing tools in the control panel are a first step in the direction of offering Epik Developers an integrated solution to Acquire, Build, Manage and Divest domain assets — all from one control panel.  Improved tools for reporting and analysis is a major theme for early 2011.
  • International Expansion:   We think of ourselves as a global company. While we greatly appreciate the  early adopters from Europe, Middle East, Asia and Latin America, the majority of the developers are based in North America. Also, our content is overwhelmingly in English.  During early 2011, we will announce the opening of a London office to better serve Europe, Middle East, South Asia and Africa.  Additionally, language support will be expanded beyond English.

These are a few of the main themes.  We have a few other surprises in store.


DevCon 2011 – September 14-16, 2011 in Seattle
The first Epik Developer Conference (DevCon) exceeded my expectations in almost every way.  It was a great event — professional but comfortable, and a good value too. DevCon II will be bigger and better than the first one.  Planning has already begun.  If you are looking for an excuse to visit Seattle, this is a good one.  The date is set: September 14-16, 2011.

Best wishes for a great 2011!

Join the discussion 5 Comments

  • Richard says:

    Great news about your London expansion plans. Being a UK citizen myself I can see the benefits of having an operation over here in order to grow the platform ever further.

    Been good working with Epik in 2010 on my limited number of sites but lets get adding to those in 2011.

    Happy New Year!

    *** RWM *** We are excited about establishing an operating footprint in Europe. While we don’t mind getting up early or staying up late to overlap with the European daytime, there are some important aspects of working regionally including negotiating partnerships with regional partners for content and ad feeds as well as scouting strategic opportunities that surface from time to time.

  • Lennard says:

    I am also very excited about the expansion to Europe, I think there are a lot of opportunities especially in the UK and German market.
    I already have 2 .co.uk Product Portals and am planning to have more domains added. Just need to sell some others to free up some cash 😉

    What about the Spanish speaking community in the US though are there some opportunities there?

  • Hello Rob,

    I am impressed with the foot print you are creating. Congratulations and Good Luck !

    Gratefully, Jeff Schneider (Metal Tiger)

  • Hello Rob,

    We agree with most all your observations. One glaring statement on .com valuations may be apparent from your test modeling, but in the real world, will not duplicate itself?

    Gratefully, Jeff Schneider (Metal Tiger)

  • Hello Rob,

    We have made a key comment on Ricks Blog that you may enjoy under Branding vs Branding vs sale. It involves Google who i know you want to eventually supplant,because that is my aim as well.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

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