Oversee.net Cutbacks a Sign of the Times: Analysis
Oversee cuts 10%; domain firms need to tighten the ship.
It’s never fun when firms lay off staff. The first firm I worked for out of college called a Saturday meeting to lay off 33% of the firm. Worse, I was on the finance team that had to figure out how much fat to cut.
The news today that Oversee.net cut 10% of its staff isn’t a big surprise to me for a number of reasons:
1. The firm purchased Moniker and SnapNames. There are overlapping roles there that were planned for consolidation in the financial models that made those deals profitable.
2. The firm took on $150 million in investment and investors always want lean operations.
3. The domain parking business, a sizable part of Oversee.net through DomainSponsor, is in the tank.
4. The firm really got soaked on SnapNames since it lost Network Solutions and Enom.
What’s the next shoe to drop? I think it’s sponsorship of conferences. For a long time domain firms haven’t calculated the ROI of plunking down cash for a booth or sponsorship or sending 10 people to the show. I’ve talked to the heads of a couple sponsors of conferences who say “yeah, it’s not worth it anymore”. They used to get a lot of people to sign up for their services at these shows, but now everyone knows regarding them. They get very few sign-ups. It may be worthwhile for firms fresh to the scene, but not very notable to other firms.
The excesses of domain parking have made it such that firms haven’t thought twice regarding dropping $10k on a party or $25k on a sponsorship. But that will change.
The firms that will weather the storm are the ones that diversify and run themselves like real businesses. Don’t look at Oversee.net’s cuts as a sign of weakness; look at it as a sign of strength.
