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March 25, 2014

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Czech Mate: After Making Sweet Music With Elephant Orchestra Jan Barta is Out to Conquer the Rest of the Business World

By Ron Jackson 

Can you imagine losing everything you own? Not just you, but every member of your family losing everything they own as well? Jan Barta, one of the brightest young stars in the domain industry (as well as in the Czech Republic's mainstream business world) can imagine it because his family lived it.

The 26-year-old Barta has become well-known in the domain industry after co-founding Prague-based domain investment, monetization and lead generation company Elephant Orchestra in 2007. Barta has since diversified into other businesses including feature film production, auto insurance, mobile marketing and many more that are giving him an ever growing financial footprint in Eastern Europe and beyond. 

Things could have turned out much differently for the young entrepreneur but he seems to have inherited a success gene from his forefathers - a trait that a historic political upheaval in his homeland could not eliminate.

Jan Barta

Barta's family had accumulated considerable wealth in the first half of the 20th Century - wealth that would be confiscated when the Communists took over the country in 1948. One of his 

Frantisek Krizik
Circa 1902

ancestors (a great great great grandfather) named Frantisek Krizik was a famous Czech inventor. Krizik created the arc lamp and is credited with helping to electrify much of Czechoslovakia by building power plants, tram lines and among other things, providing lighting for the National Theatre. Today there is even a metro station in Prague named after him - appropriate because he also held a number of patents in train signaling (in an interesting side note that domain owners, who sometimes have to deal with over reaching trademark interests, will be able to relate to - Krizik successfully fought off a challenge to one of his patents from industrial giant Werner von Siemens).

Barta said, "He also vividly exchanged letters with Albert Einstein, which our family still has in its archives. Though he was a great inventor, he wasnít a very successful businessman. However, one of his daughters married into the Barta family, and they helped fund his ventures. The Barta family was the largest cement producer in the country and also owned one of the largest construction companies and a significant stake in Staropramen, one of the most famous beer brands here."

The Barta family's reach even wound up touching a family that decades later would produce one of the nation's most revered presidents - Vaclav Havel - who led the company after the fall of Communism. Jan said, "The Barta family owned the Barrandov Hills next to Prague, where we wanted to build a cement plant. But in the 1920s we sold it to the Havel family, who then built film studios there. I am a huge fan of family heir Vaclav Havel and just recently managed to have him play a cameo role in our movie Czech Made Man, which was great (you can see the trailer for that film here)."

The Barta family's fortunes took a dramatic turn for the worse when World War II wreaked havoc on millions of lives across the continent. "My great grandfather was the president of VSCHT, the Czech Technical University. When Nazi Germany occupied Czechoslovkia, the Nazis cleansed the Czech intelligensia and sent him to a concentration camp, which he fortunately survived," Barta said.

"The takeover of communists in 1948 was a tragedy for the family. Since we had a business background we were strongly persecuted, not allowed to study in universities etc, so large chunks of the family ended up in exile, including my parents," Barta continued. "My mother for a different reason Ė her father was an RAF pilot in the second world war and the communists portrayed all who fought in the west almost as traitors - only members of the resistance connected to Moscow were portrayed as heroes."

It would be 41 years before the family's long nightmare ended with the collapse of Communism in 1989 when at least some of the property the family had owned before the war was returned to them. "That brought a lot of the members of our family back to the country," Barta said. " My father started managing the parts of the estate that were given back to the various branches of the family, having a personal stake in them as well. This included two castles in the south and about 1500 hectares (about 3,705 acres) of forests and agricultural land." 

Barta, who was born on April 18, 1985, was four years old

One of the castles the Barta family regained ownership 
of after the Communists lost power in 1989.

when the family regained that portion of what had been lost. He has early memories of growing up in one of the castles in the village of Stadlec, home to about 500 inhabitants. " Growing up in a village was retrospectively fantastic," Barta recalled. " I attended the primary school there and spent my childhood gardening, fishing and playing soccer." While his father managed the family estate his mother taught English in a larger village nearby. "My parents were a huge influence on me - to date they are the biggest role models for me," Barta said. " I assume that from my fatherís side I got the business genes and from my motherís side the more social aspects of life."

Jan Barta with a best friend

" Through my mother I also developed a huge love for animals, especially dogs," Barta said. "They have always been like family members for us, the sadder it is when they pass away. Unfortunately I cannot have my own dog now, since me and my girlfriend live in the very center of Prague and I do a decent bit of traveling as well. I at least help fund a dog shelter near Prague now."

" Also, since my early childhood, I was fascinated by growing things Ė I acquired this trait mainly through my father and grandfather," Barta added. While following that passion it soon became evident that this was a boy who was born to be an entrepreneur. " By the age of 9 or 10 I was growing vegetables on a one hectare plot of land and employing village kids for 10 cents an hour to help me out, selling the produce later," Barta recalled. 

Barta displayed many other talents while growing up, including one that would presage one of his current businesses as a movie producer. "When I was 8 I was one of those child movie stars, playing in a TV movie called Stalo se na Podzim alongside famous

Czech singer Marta Kubisova," Barta said. "My godfather is Jan Nemec, a famous 1960ís film director, who gave me the role. I still have a fondness for films and actually produce them now."

By the time he was 11, Barta had also developed an interest in the stock market. "I remember that for about three years I was glued to CNBC and Bloomberg," Barta said. "After spending so much time researching, I persuaded my parents to provide me with some money to invest. For about two years I was massively successful, so I believed I was a genius and believed that there is no sense for me to even attend high school! Then came the Nasdaq crash and I lost about $150,000 of my parentsí money."

Just 14 when the crash came Barta, like all good entrepreneurs, got back up from the canvas and started planning a comeback. "I was attending a school in the town of Tabor and sort of felt I had outgrown my peers there, so together with my parents we decided that I would move to Prague to attend the English College in Prague (ECP), a prestigious high school, where the curriculum is taught in English. The ECP totally kick-started my career and personal development. Our year was full of absolutely amazing people and the professors were fantastic. It was in these high school years that I developed a liking of existentialist philosophy and a fascination for great literature. My favorite writers include Nabokov, Dostoyevskij, Marquez and E.L. Doctorow."

Since the ECP gave him such a big boost Barta decided he wanted to give back by making it possible for talented but less fortunate kids to have a similar experience. He does that today by completely funding tuition fees and other expenses for one student every year as part of his own ECP scholarship program. 

Jan Barta with his classmates at the ECP high school in Prague
 (Jan is in the center of the picture in a dark shirt and white jacket)

After having his horizons expanded through his high school studies, Barta decided upon graduation that it was time to see more of the world. He his sites on London, England. "I had  visited the city for a language program when I was younger and thought it was fascinating. My parents wanted me to continue my education at Cambridge or Oxford, but I applied for the London School of Economics," Barta said. Unfortunately they denied his application, but Barta was still sold on London so he went to plan B.  "I ended up at University College London, also one of the top universities in the world, and studied Economics with East European Relations there, finishing with a BA degree after 3 years," Barta noted.

"Although UCL is a great university, I definitely learned more by reading the Financial Times every day and the Economist. What brought the most added value was simply being in London and building all of the social connections. I met plenty of very talented people and made ton of friends there. For example, a classmate of mine, Richard Irving, was my first employee when I started Elephant Orchestra in Prague after University. Richard later started his own competing domaining business called Tiger Names, which was a little disappointing to me, but we are friends again now. My best friend from University is Gafar, who was my flat mate for two years and has a very similar mindset to me. Gafar also has some domain investments now that I helped him with."

Throughout high school and college Barta also remained immersed in the business world. His stock market losses meant he had to find a new source of income and the web provided just the solution he was looking for. " In 1999 me and a friend co-founded Nabit.cz, which became a top10 visited website in the Czech Republic (CZ).  We were the first to offer people black and white logos for their Nokia phones. That was the foundation of B3net, our mobile marketing company. We would run various mobile campaigns for blue chip clients like Pepsi, Toyota and Kraft Foods," Barta recalled.

" During this time Ė when I was 17 Ė I also had a brief internship at investment bank UBS Warburg in Zurich for the summer and I think I still am the youngest intern they have had there. That was a great experience, because I realized I did not want to be an investment banker after all and didn't want to work for anybody else," Barta said.

"Just prior to starting university, I managed to sell the B3net business to a larger mobile marketing player and got something like $50,000 for it, which was big money for me. I remember I blew most of the money on promoting hip hop concerts, drinking and taking my girlfriend for vacation! During my first year at University I co-founded another mobile marketing company called Crazy Tomato, which still exists today and I still co-own it. Itís one of the largest mobile marketing companies in the CZ," Barta said.

"In my last year of University I hit my first little goldmine. I managed to persuade Vodafone in CZ to give me a revenue share of what people spent on data on their mobile phones through a technology called WAP." Though that revenue stream did not last long it finally gave Barta a nice chuck of change to enjoy London life after years of being on a tight budget. Naturally, like a lot of college age kids would do in that situation Barta said he used the money to lead a ďrockstar life with party after party."

The experience did have lasting benefits though as it helped prepare Barta for his post college career as a full blown entrepreneur and domains would play a key role in the next stage of his life. " Being in London, I wanted Crazy Tomato to expand into the UK," Barta said. " By coincidence there was a company called Ringtones.co.uk that just went bankrupt when I was checking out their site. So I emailed them if they would sell me the domain. I ended up buying it for $16,000 with a plan to build a ringtone website on it." Barta got the site up but after about three months it wasn't performing as well as he had hoped. At the same time, while browsing the web he came across Sedo.com, the domain sales and brokerage company that everyone in the domain business is familiar with.

 "I emailed them and asked how much the domain was worth," Barta recalled. " Within two days I got a $110,000 offer from broker Ash Rahimi (who later co-founded NameDrive). The buyer was Mad.biz (who I would later buy 

portfolios from), a company represented by Daniel Law (who just recently started Rook Media with Ash). I obviously knew that you could buy and sell domains, but I this was an ephiphany!" Barta declared.

"I saw that the new owner had something that looked like an error page on Ringtones.co.uk (I didnít know anything about parking then)." Barta asked the new owner if he could rent the domain until they found a new buyer since they didn't appear to be using it. "I still remember their reply to this day," Barta said. "They told me ďWe make more money then you are offering now.Ē Thatís when I realized that parking can make a lot of money and started researching the whole field in detail with a plan to enter the business. Thatís when I discovered DNJournal, DNForum, Frank Schillingís blog and others," Barta said.

"The plan was to replicate this model in the Czech Republic and thatís how Elephant Orchestra (EO) started," Barta continued " The vision was simple Ė acquire the top generic names in the CZ and monetize the traffic. I realized I am coming late so I needed an investor to put up the cash. Luckily Pavel Stovicek and his partners, prior investors in Crazy Tomato, had just sold their IT integration company and were willing to put up the cash, so we founded Elephant Orchestra in the summer of 2007, just after I finished university."

" I went on a buying spree and bought domains like pujcky.cz (loans), leasing.cz, hracky.cz (toys) etc in the aftermarket. But I discovered there isnít much type-in traffic in the CZ so it would be necessary to expand abroad. I bought my first .com portfolio in December 2007. Meanwhile, the Czech financial domains I had acquired served as the foundation of our lead generation arm. Lead gen is a concept I pioneered in the CZ and we are basically the Czech QuinStreet now. Today Elephant Orchestra has three arms Ė our owned and operated domain portfolio, a lead generation arm and Elephant Traffic, which is our monetization platform for domain traffic Ė we sell type-in traffic directly to advertisers. I would say that Elephant Orchestra today is a vertically integrated monetization company," Barta said.

"We currently has 60 full-time employees. Pretty early on I hired a professional CEO to oversee the growth of the company, since I am not very good in day-to-day management. Iím more of a visionary focused on strategy, so I brought in Wei-Hai Chu, a Taiwanese born Dutch citizen as CEO. He also sort of acts as the father in the company, because most people in EO are very young. Peter Krajicek is CFO and oversees finances and then itís the three divisional heads Ė Jeremy Lopez runs Elephant Traffic, Peter Misek is in charge of our domain portfolio and Arnost Machytka is head of lead gen. Both Peter and Arnost are my classmates from the English College in Prague. Otherwise EO is a very multinational company. We have employees from 13 different nationalities including countries like Peru, Argentina, Ukraine, India and Uzbekistan. Also we have a lot of Americans working for us from the Prague ex-pat community," Barta added.

Part of the Elephant Orchestra team in a photo from the company's website. 
Jan Barta is 3rd from the left in the back row (wearing a a blue shirt). 

Over the past couple of years domain parking revenue has fallen off a cliff, a situation Barta is painfully aware of. "It affected me pretty drastically, like everyone else,' Barta agreed. "I donít believe monetization will ever reach the levels that we saw in 2007. However I do believe that there is room for at least a slight rebound, though it is very unlikely to come through PPC. The uplift I believe will come through alternative monetization. Our Elephant Traffic platform provides one way - there are certain niches where we are already beating PPC significantly. I also believe in using domain traffic for CPA (cost per acquisition), lead-generation and email marketing," Barta said. 

"What is a completely untapped area is somehow incorporating display advertising into domain monetization. I believe there is going to be a renaissance in display over the coming years, where display will grow much faster than search. This will be driven mostly by developments in behavioral targeting and real time bidding," Barta predicted.

While PPC has fallen on recent years, the demand for ccTLDs has risen with aftermarket sales of country code domains consistently outpacing non .com gTLD sales. Barta commented on how the .cz ccTLD representing his homeland - the Czech Republic - is performing. "The .cz zone is currently growing at about 10,000 domains a month and there are now over 700,000 .cz domains out there," Barta said. 

Barta and Elephant Orchestra models 
at a 2010 Affiliate VIP event

" What helps is that the registry, CZ.NIC is pretty competent. EO is the largest holder of .cz domains. When it comes to the aftermarket, my estimate is that the annual size is about $2-3 million for .cz. We have seen some $500,000+ sales in the past, including dovolena.cz (holidays).when it comes to other East European countries, Poland's .pl is pretty advanced. Hungary (.hu) and Slovakia (.sk) are lagging I would say."  

Some people believe that new technological developments and the rising importance of social media and mobile platforms will have a negative effect on the value and importance of domain names in the years ahead. It may surprise some to know that Barta is among them. "I donít think the overall prospects of the domain industry are that great unfortunately," Barta said. "I donít really believe domains are that much of a growth business, itís more of a share business with respect to who takes more of the pie, but the pie isnít growing. So over the last year and a half Iíve been heavily diversifying into other businesses."

"Also, I believe that in this decade, the way users navigate across the web will fundamentally change be it through social, mobile or whatever. There is a pretty straightforward fall in type-in traffic over the last two to three years. Obviously domains will be still very important when it comes to building brands, but their effect as traffic generators will probably decline," Barta predicted.

Barta's burgeoning business empire keeps him on the go.

Whatever happens, Barta plans to be ready for it by having irons in as many fires as possible. "Domains are probably a minority part of my business ventures now-a-days," Barta noted. " My crown jewel for example is currently ePojisteni.cz, which is the largest online car insurance provider in the CZ, I own half of the company and see huge growth there in the next three years. I also co-own slevydnes.cz, which is one of the largest players in the daily deal business in the CZ, which we plan to expand internationally now.

"I co-own Semantic Visions, which is a start-up focused on the semantics of the web. We just signed a big deal with

SAP which will have SAP integrate our semantic data into their business intelligence products. I also co-own Duck On Truck, which is a Facebook developer behind the recently launched Miss Internet app. I also majority own a chain of liposuction clinics called Slim & Go in the Czech Rep. Apart from that I fund a ton of other internet start-ups that could have a bright future ahead of them," Barta said.

Many of Barta's favorite pastimes have wound up generating revenue for him too. "I play poker 6-8 times a month and have become one of the top high stakes poker players in the Czech Republic. It's not uncommon for me to make $100,000+ in a month of playing poker just as a hobby," Barta said. As mentioned earlier, I also enjoy producing movies and  co-produced a movie called Czech Made Man that is currently in CZ cinemas. I believe itís the first movie ever made about the life of a domainer - the legendary denny007, as he used to be known on the forums. Iím now producing another low budget movie, which is sort of an allegory about current moral values. Iím also trying to acquire the rights for Palahniukís short story Guts to be filmed."

"Apart from that Iím a pretty big tennis fan and  I've recently been playing twice a week. I also like spending time with my girlfriend and Iíve been doing a lot more non-profit work as solely making money isnít that much of a challenge anymore," Barta said. 

While Barta thinks the future is uncertain for domain values, this business remains #1 in his heart. "I can't stress enough how much I owe to the whole domain industry. There are so many wonderful people in the business that it would take pages and pages to name them all," Barta concluded. 

  *****   

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