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Reboot: How Domains Helped Australian Entrepreneur Michael Gilmour Bounce Back Bigger Than Ever After Losing a Fortune Overnight 

By Ron Jackson 

Domaining is a global industry and for me one the most rewarding aspects of the business has been the opportunity to meet so many brilliant entrepreneurs from around the world. Coming from so many different countries and cultures, they offer fresh perspectives and ideas that people in more provincial industries never have the opportunity to benefit from. 

Many of the best, brightest and certainly most joyfully boisterous people in the domain business hail from the lovely land down under, Australia. Aussies have been some of our industry's most loyal and ardent supporters and, thanks to their willingness to travel anywhere on earth for a domain conference, many of them have become close friends to domainers in every corner of the globe.

This month the friends they have made get to repay the favor (and have a great time in the process) by attending the T.R.A.F.F.I.C. Down Under conference that Fabulous.com is hosting on Australia's Gold Coast November 18-20

One of the the first persons show visitors will look up is Melbourne's Michael Gilmour (in fact days before the show started, Michael welcomed 20 early arrivals to an Australian barbecue cookout at his house). In his many travels the personable Aussie who writes 

Michael Gilmour

WhizzbangsBlog has been a great ambassador for his nation as well as for the domain industry at large. He was already on our short list of potential Cover Story subjects and this month was clearly the perfect time to tell his story.

In many ways, Gilmour's journey through life  has been the quintessential boom to bust to boom again saga that serial entrepreneurs so closely identify with. After working hard his whole life he was worth millions only to suddenly find himself, due to circumstances beyond his control, flat broke almost overnight. In 2003 he took his last $100 and bought a domain name. Five short years later, Gilmour is one of the most successful people in an industry that is know for amazing success stories. 

We'll tell you about the influences that shaped his life, the accomplishments that propelled him to great success and how he managed to bounce back and fly higher than ever before after turbulent financial weather nearly grounded him for good.

Gilmour was born in Melbourne in 1966, the third child of accomplished science teacher Ray Gilmour and his wife Margaret. Ray quickly rose to the top of his profession and authored a number of text books that were used in Australian schools for many years. 

"Both my mum and dad were real adventurers who never dodged a challenge or a chance to experience something new," Gilmour said. "When I was just a year and a half old my parents decided to move the entire family from sunny Australia to freezing northern Ontario in Canada . We lived in a tiny mining town called Manitouwadge north of Lake Superior where my dad became the head of the science department at the local public school."

(Hit the pause button) Somehow I knew Gilmour's story would have some connection to Canada. I'm beginning to wonder if there is a single great domainer who doesn't have Canadian roots! There is Frank Schilling, Kevin Ham, Gary Chernoff and a seemingly endless list of others. Now here's Michael Gilmour who lives on the opposite side of the globe and he too has ties to the Great White North. Must be something magical in the water there! (Resume play).

Michael's parents, Ray & Margaret Gilmour

Though his family moved back to Australia when he was ten years old, Gilmour never forgot his childhood home in Canada. "I took my own family back to Manitouwadge a couple of years ago and I couldnít believe how small it is or how beautiful. It was a great experience," Gilmour recalled. "I think that my greatest achievement was winning the snow shoe race in grade two!"

"In grades 5 and 6 my teacher, Mrs. Dowie, demanded higher and higher standards and rather than becoming crushing it became a real challenge and an inspiration. My parents loved her standards of excellence as it was very agreeable with their own ethos on life. I remember telling my mum that I just received 96% on a mathematics test and the first thing that she asked me about was what happened to the other 4%! Many people may think that this is harsh but it was done in a good natured manner. Itís the mistakes that teach us not what we got right on a test."

Sarah, Elise & Timothy Gilmour
Michael & wife Roselyn's children

"I find myself asking my own kids exactly the same questions as my mum did to me. I think that as long as you do it in a good natured way and balance it with a great amount of encouragement then it can be really inspirational," Gilmour said.

"My parents both instilled into me a strong sense of a moral compass that was always grounded in an active involvement in a local church. This really helped me later in life when I was on the receiving end of a few curve balls. Iíve always received a tremendous amount of encouragement in whatever I did from both of them and

their ďcan doĒ attitude has helped me push through many of lifeís challenges. I believe that this coupled with their huge capacity to love and help those who are in need have helped provide me with a relatively balanced perspective on life," Gilmour said.

"I think that one of the challenges that domain owners face is managing that life/obsession with domains balance. Iíve said it a number of times before that Iím amazed at how hard domainers work for their passive incomes. My parents have always worked really hard but they also knew how to have a lot of fun and laugh a lot as well."

Like so many other people in this business, Gilmour exhibited a very early interest in computers. His started in grade 8, not long after his family had moved back to Australia. "A good friend (who is now one of my business partners) and I built a computer games system we saw in an electronics magazine that was very similar to ďpongĒ. I must admit it that it was pretty exciting playing a computer game that didnít cost quarters to play," Gilmour said.

"Every Saturday we used to ride down to the local Tandy Electronics store and try and program an old TRS-80. I think that the manager of the store used to take the attitude that a couple of kids on a computer was a pretty good advertisement. Iíll never forget the first time that we managed to write a program that filled the whole screen in with white pixels. I laugh at it now but back in those days it was quite an achievement."

"At the end of Year 11 I managed to get a holiday job filing thousands of files at a local credit union for one hundred dollars a week. It was the most mind numbing boring job you could ever do but by the end of the holidays I managed to get together enough money to buy my first computer. It had 16K of RAM and I thought to myself, ďHow could anyone ever use all that?,Ē Gilmour laughed.

"I was hooked on computers and after high school I went on and completed a bachelor of science in electronics and computer science. I canít say that I loved every minute of the course but it did give me a qualification."

Michael & wife Roselyn on his 
college graduation day in 1987.

Gilmour actually started his business career long before he got his college degree. "I started my first business with a friend of mine when I was 17 years old," Gilmour said. "We created a board game, raised funds to have it manufactured and then distributed it to stores around the country. It made its money back but it was never likely to be a massive hit. In terms of teaching me about business it was the best thing I could ever have done though."

"Since I was always interested in games, during a vacation I called up a local computer games company (Melbourne House) and told them they should hire me. Iíd researched the company and knew that they were a global player and that some of their game titles were the best available. After sitting down with the CEO for about thirty minutes I ended up working with the team that developed the game ďLord of the RingsĒ on an old Amstrad Z80 computer. I then moved on to a game called ďMugsyís RevengeĒ where I coded the story board and had fun squeezing as much game play as possible into a ZX Spectrum computer with 32K of RAM."

After college Gilmour returned to the company to work on reverse engineering an early Nintendo so they could program it. "We were tucked away in a completely separate building and it felt like being part of a black-ops team. My claim to fame was that I blew up the first Nintendo in Australia and then cracking the code so that the company could program the system," Gilmour said. 

Michael & Roselyn's Wedding Day

"I have always been heavily involved with computers through the years. Back in the eighties I was running a bulletin board system (BBS) and designing banner advertisements out of ANSI characters. However I soon realized that despite my love for computers that it was really business and people that captivated me. I left the games company and worked with my brother in his music concert promotions business developing marketing and distribution strategies for the business. Sadly, he ended up losing his house after a particularly bad concert tour went under. But all is well now - heís an incredibly successful businessman that owns a flight simulator business."

"After getting married to my wonderful wife, Roselyn I ended up riding the wave of the desktop publishing revolution, wrote a number of training courses and entered the
professional speaking circuit. I spoke at events all over Australia , New Zealand and into Asia with a real highlight being asked to speak at the World Marketing Conference in Bangkok . It was a fantastic successful time that had the severe downside of me being continuously away from home," Gilmour recalled.

"Sometimes you have to make tough decisions and I love my wife much more than my career so after about 50 flights in 3 months I completely abandoned the speaking circuit and started a full time MBA program. This was a fresh start on life and also a time to enjoy my family while I studied," he said.

"My MBA marketing study group had the choice to do an assignment about the photocopy paper industry or one on the Internet. I really pushed for the Internet but democracy won the day and we ended up getting a high distinction by writing a marketing assignment on photocopy paper. It did help that one of my team worked for Australia ís largest manufacturer of photocopy paper so he had all the data we needed," Gilmour smiled.  

Though the paper was done, Gilmour still wanted to investigate this exciting new communications medium - the Internet. "Iím a firm believer that if you want to understand something then leap in the ďdeep endĒ so I founded an ISP in a back room of my house," Gilmour said. "The crazy thing was that it just started growing and I ended up with about 50 modems buzzing away like the Starship Enterprise on steroids!"  

Gilmour today - on the bridge of his Internet "Enterprise"

"After my experiences with the ISP I used the knowledge to raise a few million dollars from the venture capital market to develop an innovative online psychographic marketing technology. This ended up being used by an immensely popular TV program for broadcasting alert messages directly to peopleís PCs. I was flying high!," Gilmour exclaimed.

But then, as quickly as that business had taken off, it all went south. "I woke up one morning to find out that due to an international merger my major shareholder was unable to fulfill their obligations of additional investment. Thereís nothing quite like having 22 staff members and no money in the bank to immediately get your attention. In the end we had no choice and the business had to be closed. Almost overnight Iíd gone from being worth millions to having lost nearly everything. It was not a fun time," Gilmour said.

"So there I was sitting at home with no job and wondering what I was going to do. Back in 2003 my cousin and I used to talk nearly every night about the Internet and I remember after one of these conversations at about 2 o'clock in the morning I ended up investing $100 in my first domain name. That $100 was literally all my wife and I had left. The next morning after Iíd explained what Iíd just done my wife was so incredibly gracious that I will always be in awe of her. The crazy thing was that the next day the domain earned fifty cents. I was over the moon! Iíd hit the jackpot! What I saw was the fact that Iíd earned 50 cents with no effort after the initial investment," Gilmour said.

"We ended up selling as much of our stuff as possible to invest in domains (which wasnít much). I even used to sell domains at $1 per overture point just to raise cash to buy more domains. The magical point came when our living expenses were covered and we just kept on reinvesting to grow the cashflow. Iíve always been pretty analytical and it didnít take me long to realize that an absolutely critical aspect of domain investment was optimization. Like everyone I initially had huge spreadsheets but it wasnít long before I started developing a system for monitoring my own portfolio of domains."

I was asked to speak on optimization at the first DomainFest Global conference in Hollywood a couple of years ago and I shared with the attendees some of my thoughts. I assumed everyone was optimizing and quickly realized that not many were really developing methodical systems for getting the most from their domains across time. From this experience I  

Gilmour speaking at the first DomainFest 
Global
conference in Hollywood, CA 
(February 2007)

realized that I couldnít build a new optimization business entirely by myself so I approached two highly experienced businessmen who had particularly unique skill sets that complimented my own and we founded ParkLogic.

"With all of the fraud in the domain industry we have taken a particularly hard line on who we allow into the ParkLogic network. We typically work with the larger players in the industry and rely a lot on our own personal relationships with domainers to help maintain the traffic quality. This has helped us enormously in eliminating fraud from our network. Quality domainers typically bring quality traffic," Gilmour said.

"At times, managing ParkLogicís growth has been a challenge as itís always easy to grow until you explode rather than sensibly manage growth. Weíve managed to do this and even during these turbulent times weíve manage to provide some positive results for customers."

Given Gilmour's expertise with PPC we asked for his take on the big revenue decline we have seen in that category and what he thought about the the prospects for a rebound. "One of the reasons why I think that the PPC model is so great is that at the moment it is the only scalable model available that enables domainers to effectively monetize their traffic," Gilmour said.

"Even though it is scalable I personally believe that it was only a matter of time before the PPC bubble burst and we saw a downtrend in EPC (earnings per click) rates. About twelve months ago I presented a slide at a conference that predicted the current recession that weíre all now experiencing. I recently wrote an eleven article series at Whizzbangsblog.com on it which can be viewed here  (free registration required to read)."

"In summary I believe that the PPC market has declined predominantly because there is no 

need to keep on paying higher values for traffic in a market that has no transparency and no standards. Both major advertising partners (Google and Yahoo) are supporting incredible company valuations that require them to produce outstanding figures quarter on quarter or they get clobbered by Wall Street. This coupled with the global downturn would inevitably flow into lower PPC prices," Gilmour noted.

"Even though globally it is predicted that online advertising will continue to increase I donít believe that it will increase at the same rate that it was previously. On the other hand the number of users online has still continued to accelerate. These users will generate more traffic for relatively the same advertising dollars and this is what is contributing to lower PPC rates."

"What we are seeing in the marketplace is a feeling of fear coming in and many domainers are thinking that they see that the grass is greener over at a different parking company. In reality if you want to maximize your revenue you need to use them all and have sophisticated systems and people to manage it Ė hence ParkLogic."  

"I think that there are a few things that can be done to reduce the length of time that the domain industry experiences a recession. The first is the introduction of standards that will provide both advertisers and investors secure metrics around what they are investing in. In particular, this should help advertisers understand the domain channel a lot better and enable them to compare uniques vs. uniques and clicks vs. clicks," Gilmour said. 

Of course many domainers are looking beyond parking all together and looking into domain development. That solution is one that Gilmour believes is not quite ready for prime time - at least not on a large scale basis. 

"As Iíve mentioned already I believe that the fundamental problem with development is that you can't do it as a scalable solution across thousands of domains. Many people have tried and many people have failed. The advantage that PPC generated revenue has is that it is scalable. Given that most domain owners have built large portfolios of domains building them all out isnít a viable solution. This will mean that PPC is likely to be here for a while yet," Gilmour said.  

"On the other hand selecting a few prime domains that you are passionate about and developing them as stand alone businesses could be viable. Notice that I said a few (i.e., maximum of three) and not hundreds. I personally have my blog and Iím just finalizing Downwind.com.au for the Australian aviation market. I really enjoy Whizzbangsblog.com and since becoming a pilot I love flying. These are two great personal reasons to develop a site."  

"The blog does take some time but I must admit it that I really enjoy writing the articles and talking with other domainers. I always believe that business isnít just money in the bank but the relationships that you make alone the journey. My blog allows me to develop and extend those relationships."

"Iíve also tried to develop a domain wiki which contains a lot of information on the domain industry. I would welcome anyone and everyone to contribute to the wiki so that we can capture the knowledge and history of this incredible industry that we are all operating in."  

"I think that many people try and solve the development conundrum from a technological perspective. I personally believe that it has less to do with technology and more to do with management focus, real content, real products and real customers. These are all the little nasty things that we can all ignore in the PPC world," Gilmour noted.  

"I still believe that there will be companies that embark on developing scalable developmental solutions for domains and they will claim that theyíve solved the problems of the past. I think thatís great! Iíll do a test with a few of my domains and compare the results to what Iím getting at the moment. One of the nice things about being a domainer is that it costs us very little to do a test."

Domain owners are facing many challenges today, the most recent being the state of Kentucky's attempt to claim jurisdiction over domain names. Gilmour has been successful in organizing Australia's Internet entrepreneurs so we asked him how he thought domain owners worldwide can best respond to efforts aimed at changing laws or policy in a way that will make it easier for covetous parties to separate current owners from their assets.

"In order to tackle an issue like Kentucky it requires a coordinated effort from a recognized body that represents the entire industry. In order to have a body that is recognized you must put aside your own personal prejudices and work 

alongside people that may be your bitterest competitors. This also means that because you act a 100 million miles an hour it doesnít mean that the association will. Working with people and not against them is the key to long-term prosperity for the whole industry," Gilmour said.  

"For example, when I was the vice-chairman of the Internet Industry Association (IIA) in Australia we had the CEOs of the major internet providers, MSN, Yahoo, etc. all sitting around the board table working together for the good of the industry. The IIA was respected by the government and industry because we could say that we represented 98% of the Internet users in Australia and we ended up having huge successes at an industry and legislative level."  

"Compare this to the state of the ICA (Internet Commerce Association). The ICA was setup to represent domain owners and the domain industry. In my opinion it struggles along simply because people arenít willing to put aside their differences and embrace the industry for the ultimate benefit of their domain assets," Gilmour said.  

"The ICA is the body that should be tackling the Kentucky issue and they should be the ones that say, ďIím from the ICA and I represent 100 million people in the world that visit our members websites each month." Let me assure you that this will get a politician's attention. Boycotts only get the other party digging in their heels while persuasive assertiveness from a powerful position with dedicated members can be immensely effective."  

"This brings up another point. If the ICA and the domain industry are to be effective then it must lose the U.S. centric focus. I canít remember who it was that told me this but they indicated that over 40% of attendees that go to domain conferences in the USA are internationally based. As an aside, itís strange that the prizes offered by exhibitors are often TVs, Playstations or other electrical goods that are useless to the international contingent. The ICA needs to embrace the whole domain industry and as an industry we need to view ourselves as a part of a global community that needs a central body to fight some of the fights that we canít be in ourselves," Gilmour said.

While the domain industry still has issues that need to be worked out, few people in it would change places with anyone else. It continues to draw newcomers week after week. Gilmour closed with some advice for them.

"The best thing about this business is that generally speaking the people are incredibly helpful. If youíre new then just ask the dumb questions as youíll be surprised that youíll be inundated with help, good advice and maybe even a possible deal or two," Gilmour said.  

"The flip side of this is that with every group of people there are always a few sharks that can spoil things. Just be careful and as a general rule listen to the people who donít want anything in return."

"So often I hear of a new investor dreaming up domains and registering them in the belief that money will fall from heaven because they now own these things called domains. A few lessons Iíve learned is to always ask, ďWhy does traffic go to a domain?Ē, ďWhere does the traffic come from?Ē, ďWill the traffic continue?Ē If you ask these three simple questions then youíre more than likely to protect yourself from a financial downfall and earn a financial windfall," Gilmour concluded.

Michael Gilmour

That's the voice of experience speaking and it's worth listening to. As author Laurence Peter once said "There is only one thing more painful than learning from experience, and that is not learning from experience."

*****


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