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Minds + Machines in 2014 and 2015

Written by Antony Van Couvering, CEO of Minds + Machines.

On January 1, 2014, Minds + Machines was trading at 14p. As of yesterday our share price was 7p. You might conclude from this that our company has declined by a factor of two. But from our perspective, exactly the opposite has happened. Why the disconnect?

It's the end of the year and it's time to look back at what's happened, and try to shed a little light on what's to come.

Here's how we see our company today vs. one year ago.

  • Assets: we've doubled our earning power. On our own we acquired .wedding, .yoga, .fashion, .garden, .vip, and .law. These TLDs are among the very best names applied for, and we believe that their earning power is equal to or better the other TLDs in our portfolio — and none of them have launched yet.
  • We've more than doubled our cash. Because of the private auction system, which has been embraced by all the major applicants, and because of our capital raise in April 2014 in London, we now have about $44M, up from about $15M.
  • We've gone from being distributed by just a few registrars to having all major registrars signed and selling our TLDs.
  • We built a world-class registry operation from scratch, giving us valuable intellectual property. We're a top-ten registry service provider even before our best TLDs have launched.
  • We are close to releasing an integrated consumer solution for buying domain names and deploying websites very quickly, a unique product that we believe will set us apart from our competitors.

These are substantial accomplishments for Minds + Machines. But let's look at the overall macro environment.

  • Consumers are still largely unaware of their choices in registering domain names. New gTLDs have not been rejected, but they are not yet well understood. Even so, over 3,000,000 new gTLD domain names have been sold.
  • Old-line registrars have yet to fully embrace new gTLDs; they are still pushing .com. We think this will change when some of the "blockbuster" TLDs hit the market.
  • It remains a challenge for the average person to actually use a domain name. The ability to connect a domain name to email or to a website is beyond most users. Most consumer-facing registrars have done a poor job of explaining the benefits of new gTLDs, or providing solutions to people's problems with using domain names.

In spite of this, we continue to see high prices being paid for TLDs at auction — applicants for new TLDs are clearly optimistic. So let's now look at what we think might happen in 2015.

  • We (and many industry observers) believe that 2015 will be the breakout year for new gTLDs. The major blockbuster new gTLDs such as .web, .music, .app, .blog, and .law, have yet to be launched.
  • Technology adoption is never linear — it always follows an S-curve: starting slow with early adopters only, rapidly growing as the technology enters the mainstream, and plateauing at saturation and maturity. We are at the beginning of this curve as we enter 2015.
  • Numerous recent studies and publications point to the superiority of new gTLDs when it comes to search and search rankings.
  • A rising tide of awareness will float all boats. We believe that all the major gTLDs applicants with a diverse portfolio and sufficient reserves will emerge victorious. This includes ourselves, Rightside, Donuts, Uniregistry and several others. The danger is greater for smaller applicants who have just one or two TLDs, or who are heavily concentrated in just one sector, or who have chosen to go with TLDs that attract regulatory attention.
  • Some registrars are working hard to provide an experience to consumers that emphasizes ease of use, speed to get online, and instant tools to publish and communicate. This would change a 15-year-old stale environment where domain names are like postage stamps: collected, reviewed, sold, but not used. We see this changing significantly in 2015 as Minds + Machines and others make good on the promise of innovation in the industry.

So, what's the outlook in 2015 for Minds + Machines? In our opinion, it's looking excellent. Here's why:

  • We have an enviable balance of a sizeable cash position and an agile, nimble company. We are able to move quickly and opportunistically. We can do anything from buying back shares to buying more TLDs to investing in our technology.
  • Many of our more valuable TLDs will launch in 2015.
  • We have invested in community outreach across our verticals, and we see 2015 as the year that this pays off.
  • Without debt, and without venture backing, we don't have to cater to the short-term financial goals of a third party.
  • We will participate in another 17 auctions, of which the majority will be private, which means that we will either improve our cash position or acquire further assets.
  • Our competitors will help us. Donuts, with their enormous number of TLDs, and with the massive investment and debt they've been able to raise, is in a strong position to succeed. Uniregistry, with its ties to the domain investor community and its vertically-integrated registrar, is also in a good position. Google and Amazon have yet to make their market plays, but of course have every resource to do so. As they succeed, the market and awareness will grow, which benefits Minds + Machines — and vice-versa.

2014 saw an entire industry transformed. Minds + Machines went from a story to an operating company. It was without a doubt a seminal year for us and our industry. 2015 promises to be the year when new gTLDs come into their own.

Written by Antony Van Couvering, CEO of Minds + Machines.

Minds + Machines

About Minds + Machines – Minds + Machines (LSE:MMX) is a leading owner and operator of new generic Top Level Domains ("gTLDs"), and provides registry services to a range of high-profile clients. The Group also provides domain name services to consumers through its wholly owned registrar operations in the US and Europe. Visit Page

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