April 01, 2008    

 

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Domain Heavyweights Leave Las Vegas Stronger Than Ever After Quality Time at Traffic West

By Ron Jackson
Editor/Publisher

 

230 domain industry heavyweights left the ring at Traffic West 2005 Friday (May 27) after four unforgettable days at the Venetian Hotel in Las Vegas. Every phase of the domain business has been accelerating over the past year and the 75% jump in attendance from the landmark Traffic 2004 conference last fall in Delray Beach, Florida was further proof of that.

 

The tremendous success of the Las Vegas show already has Traffic organizers Rick Schwartz and Howard Neu ready to rumble for their next round in Florida. "With the next Delray show just 4 months and 3 weeks away (October 18-22), we have established a momentum that will really will be hard to derail," Schwartz said. "I expect an even larger presence by Google and Overture and at higher levels. They are REALLY paying attention!"



 

One of the packed seminar sessions at Traffic West. Domain industry investors, executives and service providers flocked to Las Vegas to learn and build relationships that will last for years to come. 


Dan Warner
COO, Fabulous.com

The conference opened with a welcoming cocktail party Tuesday (May 24) then quickly shifted in to high gear Wednesday. A breakfast seminar hosted by Fabulous.com COO Dan Warner kicked things off. As always, Warner came armed with numbers, facts and percentages to present  an opening talk that had attendees riveted to their seats. Ira Zoot, a veteran domainer from Chicago told us, "I think the things that stood out for me was when Warner was talking about the various types of names with value and that will later have value. He mentioned searchable keyword phrases, something I have been pursuing and advocating for quite some time and either being laughed at or getting into heated conversations about!"

A panel discussion focusing on domain hijacking followed (and set the stage for a pair of seminars on that pivotal topic that followed on Thursday), along with one featuring four of the top attorneys in the industry and another with key registrars Moniker.com, Directnic.com and Fabulous.com.

Conference organizers Rick Schwartz and Howard Neu told us that one of the primary differences between the Las Vegas and Delray Beach shows was that the Traffic West seminars focused much more sharply on monetization of domain assets and protection of those assets. With regard to the latter, Schwartz said the show has raised over $50,000 to hire a lobbyist to protect the interests of domain owners. 
The Wednesday highlights also included a luncheon keynote speech from Marc Ostrofsky, (the man who sold Business.com in 1999) of Internet REIT, LLP. Ostrofsky, who was featured in a Newsweek.com article earlier this month, said his new partnership is putting together a $250-$500 million war chest to acquire top quality domains. 

Ira Zoot told us "Ostrofsky talked about value of domains beyond their PPC revenue (their developable value) and I think he "gets" it far more than the other VC guys who basically were willing to look only at the PPC revenue multipliers but really didn't seem to want to place much value on future use or growth in their valuations."

Zoot added "I kinda felt like they were trying to buy as low as possible and didn't really give us the credit for the forward thinking that has put us where we are today." 


Above - Marc Ostrofsky (left) chatting with Andy Smith, the General Manager of Marchex, Inc. (whose $164 million purchase of the Ultimate Search portfolio put the domain industry on mainstream business radar).

The venture capitalists were busy working the crowd throughout the Venetian and were also featured members of the day's most popular panel discussion. If they were expecting a series of softball questions, they had to be surprised when Schwartz pointedly asked them, "where have you guys been for the last 10 years?!" 

Pictured above - Venture Capital Panel featuring left to right: P. Kevin Kilroy of Dotster.com, Robert Hoult of Walnut-Ventures.com, Randy Dessau of Investegy, moderator Howard Neu, Peter Christothoulou of Marchex, Inc. and Richard DeSilva of Highland Capital

In addition to being a day late, Schwartz told us that the money men may also be a dollar short. During the standing room only session they told attendees they were looking to acquire portfolios for 5-7 times annual revenues. With Marchex having already paid more than 8 times annual earnings for the Ultimate Search portfolio, Schwartz doesn't believe there will be a lot of takers at those price levels. 

Schwartz told us, "the VC guys sited "risk" as the key reason for not going higher than those multiples and it was met with skepticism from the domainers who perceive the "risk" to have been taken by them years ago when they purchased their domains and not now. The exchange was lively and both the VC guys and the domainers walked away with a better sense of each others views and how they approach their businesses."

Incidently, the Marchex executives at the show provided a little more detail on their landmark $164 million portfolio purchase last fall. They said they gave up $155 million in cash and $9 million in stock options to acquire more than 100,000 domains in the Ultimate Search portfolio.

The organizers and attendees we spoke with said the first day was flawless and ended perfectly with a 5-7pm cocktail party that wound up running past 9pm! All of the conference seminars and speeches were recorded and Schwartz said they will be made available in the near future as webcasts.

The excellence continued on Thursday (May 26) with a seminar on the PPC business among the day's highlights. A panel featuring representatives from nearly all of the sector's heavyweights, including Google, Overture, DomainSponsor, Fabulous, Sedo and TrafficZ, fielded questions from a capacity crowd of domainers.

Above - Blue Ribbon PPC Panel featuring (left to right): Dan Warner (COO of Fabulous.com), Daniel Law (Director of Operations for Sedo.com), Eytan Elbaz (Head of Domain Channel for Google.com), moderator Howard Neu, Josh Myers (Overture/Yahoo), Aydrian Drewery (GM of DomainSponsor.com), Ammar Kubba (TrafficZ.com).

Schwartz drew an ovation with a question he directed to the panelists from Google and Overture, asking them why they were paying tens of millions of dollars per year to lease traffic from people in the room rather than buying the source of the traffic (domains) themselves. Schwartz also noted that the two industry giants appeared to be standing idly by watching venture capital companies snap up the few good portfolios that are on the market, portfolios that represent traffic Google and Overture will again find themselves having to lease.

 

Schwartz said the companies response centered on the high cost of buying but he told them that just as their own stock keeps rising, the cost of acquiring domains will also continue going up. It's a good point, because if those companies believe in the future of the internet and in their own business models, they have to believe that the demand and cost of targeted traffic will only increase.

 

Schwartz said there was some indication from the companies that purchasing was "under consideration". These companies rarely let competitors know what they are working on, but if they haven't been looking at buying in the past, odds are they will be taking a serious look at that possibility after this conference.

Five late arrivals registered at Traffic West Thursday, pushing the total number of attendees up to 230. Zoot was there from the start and we asked him to compare the Las Vegas show with the inaugural Traffic conference that he attended in Delray Beach, Florida last October.

 

Zoot said "I  think the people attending this conference represent a much wider cross section of the business. I personally have found the networking before, during and after the seminars to be the highlight for me, but the seminars offered a good amount of info." 

One of two busy banquet halls where attendees dined in elegance.

Zoot added, "There were quite a few folks that were at the Delray Beach conference but there were at least as many new faces, which I take as a very good sign for our business because if they were not finally start to get what we have seen for years they wouldn't have been here."
Thursday ended with a huge party at Treasure Island sponsored by DomainSponsor. The closing day Friday (May 27) was also devoted primarily to social events including a poker tournament sponsored by Moniker.com and a golf tournament sponsored by GolfCourses.com. Though these and the variety of parties held throughout the week are billed as "social" functions, they are often the events where some of the most effective networking is done.

As they did in Delray Beach, Schwartz and Neu made a point of delivering extras so attendees go home feeling like they got even more than they expected from their trip. Their attention to detail went right down to getting the town's top Elvis impersonator (featured in the current Legends of Las Vegas show) to make an appearance along with a Marilyn Monroe lookalike that the predominantly male audience obviously appreciated.

Schwartz said one of the most fascinating things for him to see at Traffic West was the networking going around the clock in every corner of the hotel and at every function, especially with respect to who was huddled up with who! He expects a number of important deals to come out of these head to head meetings in Las Vegas. 

Buoyed by the success of Traffic West, his outlook for the industry is brighter than ever. "I believe we are on destiny's path with every fiber of my being. I feel as strong about this as anything ever in my life. There are NO DOUBTS!" Schwartz exclaimed.

 

Above - left to right: Howard Neu, Elvis 
(actually the #1 rated Elvis impersonator
 in the world), Darren Cleveland and 
Marilyn Monroe
impersonator.


 

Elvis signs a poster for Traffic West organizers  
Rick Schwartz
(center) and Howard Neu.


"I keep seeing things that reinforce that we are at the right place at the right time and heading in the right direction. It comes in little things that are like guiding lights that I will not question, just embrace and acknowledge and then keep moving forward at full throttle. I wish I knew how to really describe it. Just that we are on destiny's path. It is something bigger than all of us. That's the only thing I really know." Schwartz said.

Next stop is Delray Beach next fall. Schwartz said "this show added the VC guys, Delray will add bankers and Madison Avenue to the mix. The beauty is it is not by force but a natural evolution of events and it is their will that is bringing them to us. It has taken 10 years but this ship is in blastoff mode and there is no turning back. The industry is finally getting the recognition it deserves and the frenzy is starting. I even heard the word frenzy used by others to describe things and I have chills just thinking about the implications of what is about to come!"


Some other faces in the crowd from Traffic West - Las Vegas

Andrew Manson of Google and Scott Day at opening day cocktail reception.

Left to right: Marc Ostrofsky (Multimedia Venture Partners & Internet REIT, LLP)  Dean Shannon (Founder of Fabulous.com and other companies), Bob Martin (CEO JumpStart Partners)

 

Ron Sheridan (Director of Business Development - DomainSponsor.com)

The Venetian Hotel - Las Vegas
Location of 
Traffic West 2005

 

 

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Editorís Note: For those who would like to comment on this story, we invite you to make use of our Letters to the Editor feature (write to editor@dnjournal.com).



All other previous Cover Stories are available in our Archive

 

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