Don’t forget to invest in your education. I’m not sure how non-intuitive this one is, but I definitely think most people don’t spend enough time on growing themselves. It’s like we graduate from university and then stop learning when really, most of the things we’ve learned that far aren’t going to serve us very well. Those who learn outside of just what their schools teach them, tend to set themselves up for success well later.
As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Dom Wells.
Dom Wells has been building, buying, growing, and selling websites since 2012. He now helps other investors to do the same through his company, onfolio.co. He believes the website investing space is still early, but growing fast.
Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Back in 2012, I was teaching English in Taiwan. I wanted to stay living there but didn’t want to teach anymore. This led me to look online for income, and I discovered the world of affiliate marketing, where I learned to build content-based websites and monetize them. After years of practice, and a LOT of trial and error, I decided to start buying already cash-flowing websites instead, as it’s faster than building new ones from scratch. Over time, I noticed a lot of other investors wanted to do the same thing but didn’t have the appropriate operational knowledge, which led me to create onfolio.co, where I help investors buy websites, and my team operates them.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
I first had the idea for Onfolio back in 2013, but I dismissed the idea because I didn’t have the experience or track record. I then completely forgot about it, and 7 years later I came up with the idea again, only this time I did have experience and a track record!
I think the lesson I took away from this was: 1.) Remember to write your ideas down, because you will forget them otherwise, and they might have been great! 2.) If you have a good idea and you can’t achieve it yet, figure out what you need to work on so that becomes no longer true. Even if it takes years, it could pay off.
Look at how Netflix did it. They wanted to do online streaming YEARS before they did, but knew the technology wasn’t ready yet, and they resisted doing it even when others tried too early (and failed). Eventually, when the technology was ready and internet speeds were faster, they launched their streaming service, and the rest is history.
Are you working on any exciting new projects now? How do you think that will help people?
The biggest problem Onfolio has solved to date, is helping investors operate websites. However, there’s a bigger problem, and that’s risk. What we’re working on now is the online business version of a REIT — essentially allowing people to pool money together to buy websites. This allows them to spread their money over multiple websites and vastly reduce risk. It also allows them to earn fractions of much bigger, better websites, without having to deploy a vast amount of capital. What this is going to do is allow investors to get exposure to the website investing space, and all the potential opportunity that comes with that, without all of the usual risk and operational issues they’d experience trying to do it solo.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Back when I first started looking into an online business, I came across a lot of obvious scams. I was researching one to figure out how it worked when I came across a website — ivetriedthat.com. The owner, Steve Razinski, makes a habit of trying out scams and losing money so other people don’t have to. He then teaches them how to actually make money online. Well, I became a student of his and he opened my eyes to affiliate marketing. 8 years later, he’s one of my best friends.
Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?
The uncertainty is the hardest to deal with. For loneliness, we’ve been doing a lot more Skype and Zoom calls with family and friends, and it’s actually been a great way to catch up with people. We’ve had calls with friends in different countries that we previously wouldn’t have made an effort with (but should have).
Coming back to the uncertainty, I think it comes down to reassure yourself and others that this won’t last forever, and as long as you do your best to stay safe, things will pass.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?
It would likely depend if they are an accredited investor or not, as that naturally dictates what opportunities are available to them. As I mentioned above, I’m bullish on the website investing space, so I think everybody should consider learning more about it and consider jumping into that world, as the returns and cashflow available are unheard of in other sectors, but the opportunity won’t last forever, as more money pours into the space.
Dollar cost averaging into an index fund is certainly not a bad idea, and it takes away the thing most people get wrong — trying to time the market.
Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?
Actually, I would probably focus on the sectors that are hurting today, as they have more upside when they recover. Imagine being able to buy a travel business today for pennies on the dollar, knowing that in a year or more it will recover and be worth so much more than you’ve paid for it. Of course, the trick is knowing which ones will come out the other side of this.
Another example: I looked at an online business for sale recently that helps bloggers in their day to day running of the business. Right now, bloggers are tightening their purse-strings, so that tool is likely going to experience a small decline or flat revenues for a few months, meaning it is available to buy cheaper than it was a few months ago. However, long term the business still looks good, and when people start spending again, it will be earning a lot more than it was bought for.
Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?
Anything to do with online learning (not just things like online university, but all e-learning) is killing it right now. Also, anything to do with entertaining kids stuck at home under a lockdown! Of course, by the time this publication goes live, a lockdown may have ended, so I’ll give a slightly longer-term opportunity too and say the online space in general is experiencing huge growth right now, and I don’t think people will necessarily go back to shopping less online once they’ve become used to it.
Are there alternative investments that you think more people should look more deeply at?
The reason I like online business is that right now, the average business goes for about 2.5–3x annual net profit. That’s a steal compared to offline businesses or the public markets. Your ROI is around 40% when you buy a business for that price. Given that online spend is increasing more than ever, the prospects for this investment class are better than ever. Equally, some online businesses are not particularly cash intensive to run. You don’t have to stick with an eCommerce business that handles inventory. A lot of my websites are purely content based and we monetise via advertising or affiliate partnerships.
If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?
I’m obviously biased, but I’d tell them to consider the “REITs for websites” idea I mentioned earlier, as the potential for $10,000 to snowball into a large amount over the long term is very good, and this option is the most passive.
Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?
1.) A deal has to make sense even if you can’t grow it. This is similar to Warren Buffet’s “buy a great business at a fair price” mantra. I can’t tell you how many times I’ve seen people invest in a stock, or buy an online business, hoping it will go up in value to justify their investment. That’s the fastest way to lose money. The better option is to buy something knowing that even if it doesn’t have a ton of upside, it’s still a great deal. I learned this one the hard way, by buying bad online businesses and hoping I could improve them, then being stuck with lemons once I failed.
2.) Bet big when you do bet. This again is something Warren Buffet talks about, but I learned it separately. I once spent weeks and weeks evaluating a stock with a friend, and we eventually decided to buy it. My friend put in $500, and I put in $5,000. He said I was braver than him (he meant I was taking a bigger risk). For me, it was about trying to make as few bets as possible. Why do all that work and find a stock we were confident in, only to make a small amount of profit? Later, that stock doubled in price, and we both sold. He made $500, and I made $5,000. From my point of view, he did a lot of work for very little gain. As an aside, he could easily have afforded $5,000. I don’t recommend putting in more than you can afford.
3.) Compound interest really is huge. Since I’d be talking to a child, they have all the time in the world on their side. In many cases, all they have to do is let compound interest do its thing. We are all too impatient to let money do its thing and work for us.
4.) Don’t forget to invest in your education. I’m not sure how non-intuitive this one is, but I definitely think most people don’t spend enough time on growing themselves. It’s like we graduate from university and then stop learning when really, most of the things we’ve learned that far aren’t going to serve us very well. Those who learn outside of just what their schools teach them, tend to set themselves up for success well later.
5.) Ignore what most people are doing. This is obviously very non intuitive, but most people aren’t getting rich from investing, so you need to learn to ignore what they’re doing and make your own decisions. By the time my child (who is 5 months old right now) grows up, I imagine the noise will be even greater, so the need to ignore it will be even more important.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
People tend to overestimate how much they can achieve in a year, and massively underestimate how much they can achieve in 10 years. For me? I thought I’d be making great money online within a year, when it took me a whole 18 months to just make $1,000 per month online. Still, right now I’m only 8 years into my journey and have experienced life changing success and income many times over. The key is to think about your plans in 10 years, and go from there.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
Oh wow, good question, just one movement? I think re-writing the curriculum of the civilized world’s education system. It’s a big task, but the education system was built for a world that no longer exists.
Thank you for the interview. We wish you only continued success!