fly on what he sees as the
biggest problems facing the domain industry today and how T.R.A.F.F.I.C. plans to
address them. What he has to say
in this interview will undoubtedly ruffle some feathers
but they are things he believes need to be said.
conversation morphed into something much more than the usual
conference preview, so whether or not
you plan to go to New York, I think you will find this conversation to
be of special interest as it touches on all areas of the domain
business. As a result, this is the longest newsletter we
have ever sent out, so pour yourself a glass of wine, settle into a
comfortable chair and get ready for some fireworks.
Journal: What a difference a year makes. In hindsight, the
2007 T.R.A.F.F.I.C. New York conference may have been a high water
mark for the domain industry, at least since the original boom a
decade ago. Moniker set a live auction record with sales hitting eight
figures, domainers were on center stage in the media capital of the
world and optimism was at an all time high. Since then the general
economy has tanked, PPC revenues have been halved by some accounts
and, even though the aftermarket has held up well, domainers are getting
more conservative with their money as they wait to see how the current
economic turmoil is going to play out. T.R.A.F.F.I.C. had the wind at
its back heading to the Big Apple in 2007. How are the two of
you addressing the challenge of producing back to back hits in New
York in spite of the strong headwind everyone has to deal with here in
Schwartz: It’s a secret!! But I will reveal it right
here, right now. We just keep putting one foot in front of the
other and keep moving forward. Some listen to the news and get
depressed and change how they do business and that becomes a recipe
for disaster. We see opportunity no matter what the economy
looks like and seize it. I am on record all year as saying I have NEVER
seen such opportunities in all my life. Therefore 2008 has been a
great year and I don’t see things getting worse. I only see things
getting better. I would like to remind my friends in the industry that
a guy we all know named Frank
Schilling came into this industry during the last downturn
of 2001-2002. He must have really goofed up by not paying attention to
the news and how bad things were then!
I think declining payouts is a
separate but very serious issue. I may have to go into the “Witness
Protection Program” after I fully answer this during the course
|interview. Much easier to tell people what they want to hear.
You make a lot more friends that way but that is not my style and I
see no value in BS’ing folks. I may not be right, but this is what I
see and what I believe and only time will tell the answer.
Spending on newspaper ads are
down. Spending on magazine ads are down. Spending on radio ads are
down. Spending on TV ads are down. Matter of fact, if it was not for
the election, spending would be down so much that I am sure that some
would go out of business. Stay tuned for 2009. That is when you may
see things become dire and companies begin to close shop - companies
that have been around for 50 and 100 years. I would think newspapers
may be the first to go. When you see the New York Times
in trouble, times are a changing.
Meanwhile online ad
spending is UP, not down. The payout decline to domainers is a
self inflicted wound by people and companies in the industry that are
abusing the system and domainers are not calling them out on it. Their
“Partners” are putting their futures in jeopardy. It is a serious
matter and the consequences may be stunning. One thing I do want to
make clear. The value of domains has little if anything to do with
earnings. Now it may be common practice to sell a domain for 5x or
10x but I have never bought into that nonsense and I have stated so
numerous times on the record. That was a venture capital formula that
had nothing to do with the true value of a domain name that many
domainers swallowed hook, line and sinker. The least a domain should
sell for if you are going to base it on “today’s revenue” is the
LIFETIME earnings of that domain. That means if you are 35 and
you figure you will live to 85, then 50X is your number before you
even begin to negotiate.
Folks that overlooked the Orlando
show missed what many describe as the best T.R.A.F.F.I.C. yet. The
bottom line is that EACH and EVERY T.R.A.F.F.I.C. has been the best
show yet. Howard and I have our reputations on the line each and every
time. All eyes are on us. It is hard to believe after 12 shows we keep
surpassing whatever we did at the previous show. New York won’t be
different. It will be spectacular and those domainers and companies
that show up in New York will be rewarded with opportunity after
opportunity while others are running scared.
There is only one way
to overcome current economic conditions and that is to be bullish
and proactive and go out of your way to seize opportunity.
Those that always say they “can’t afford to come” are
shortsighted. I don’t say that to insult anyone. I say it to
motivate them. I have said many times, “They can’t afford not to
come.” I can’t tell you how many folks have come to T.R.A.F.F.I.C.
for the first time and tell me after the first NIGHT or first DAY that
the show has already paid for
and wife Alina at
T.R.A.F.F.I.C. Orlando - May 2008
That their lives have been transformed. That they can’t
believe how much business they have done. That they are so happy
to meet the other folks in the industry. Success rubs off and no
other place has the energy and quality folks that T.R.A.F.F.I.C.
has. Hang with winners and you become a winner. Really not
Neu: New York, London and Tokyo are the financial hubs of
the world, so it goes without saying that New York is the place
for T.R.A.F.F.I.C. East to be in 2008. Last year we were in New York
in June, but we decided that the fall is the best time to take
advantage of the buzz and hum of business and investment in the Big
Apple. That's why this year's Florida
conference was at Disney World in May and
T.R.A.F.F.I.C. New York is in September. The climate is right for big
business deals, renewed investment interest (especially with the stock
market full of Bears), and the financial world to take notice of the
one investment that keeps increasing in value exponentially, domains.
That is why we are focusing on the Aftermarket by having 5
(count 'em 5) domain auctions with some of the best domains available
anywhere competing with each other to go to the highest bidder. Also,
our auctioneers will be the best that the U.S. has to offer.
and wife Barbara at
T.R.A.F.F.I.C. Orlando - May 2008
Journal: The theme for this show is “Beyond PPC”.
Tell us why you settled on that theme and how you will carry it out in
the informational sessions during show week.
Neu: We believe that the time is ripe for domain
investors to actively explore avenues other than PPC in order to best
monetize their domains. Though we will have fewer seminar and panel
sessions than usual due to the additional auctions, they will contain
information delivered by speakers who have never addressed
domainers at T.R.A.F.F.I.C. or anywhere else that is of the utmost
importance to all domain entrepreneurs and provide real alternatives
to business as usual.
Schwartz: GOOGLE IS GOING TO DROP THE DOMAIN CHANNEL
LIKE A HOT POTATO if this "Industry" does not wake up.
We can do it ourselves or you will wake up to nothing
because Google does not need to deal with these issues and
liabilities. The impact may take
to recover from. What makes me crazy is I am set for life. If
another penny never came in...GREAT RIDE and off to the sunset.
I have less to lose than most others and I am more concerned.
Makes no sense! Folks dismissed my words earlier this year. But
now there is evidence. The largest PPC company in our
space has laid off 10% of their workforce. Are more cuts
Two public companies in our
space largely dependent on PPC have declining earnings and there
stocks are at or near 52 week lows. Growth companies that are no
longer growing. THAT should be a concern for everyone. This is the tip
of the iceberg. In March I asked a crazy question. “I wonder
which PPC company will be the first to do a Bear Stearns?”
May not be such a crazy question after all. Some have already quietly
disappeared. Can you name them? It seems it may be working its’ way
up the ladder.
Here is what Mike Berkens posted on his Blog
and there is no way I can say it better:
“Those domainers who
registered trademark domains, taking the short money are killing
The registrars who continue to
sell trademark domains, most recently the .me registry, are killing
Auction systems like TDNAM.com which allow the sale of
trademark domains through their system are killing the industry.
Who is going to stop it?
By killing the industry.”
So when I see where we are and
the direction we are going...everyone in this industry better have a
“Plan B” that is ready to go. As long as the PPC companies
continue to monetize CRAP traffic that is WORTHLESS, trademarked
traffic that should not be monetized and anything else they can make a
penny with, this industry is going to pay a price. Take out the crap
and earnings would not drop, they would skyrocket. The problem
is there is 10x the amount of CRAP traffic as opposed to “Potent”
and “Targeted” traffic. Saying this does not make me a
I’ll have 90% of the
folks against me before I start. But that won’t stop me from seeing
what I see and doing something about it before it is too late. Plus it
should anger folks when domainer's earnings are being sacrificed
because some bean counter at the PPC company is only worried about
I am not saying all PPC
companies do this. But some are SO obvious and domainers must be blind
not to see it. I do loads of experiments on traffic and some providers
that are widely used suck when it comes to earnings. But those
that don’t experiment don’t know. Pretty hard to justify
payouts with 400% swings from one provider over another. Those
that think I make this stuff up don’t experiment. Start
experimenting and you may find out the reality of things.
Things may not be so good
right now. But ask yourself what happens to all these companies if
Google were to stop monetizing that 90%? Can you say collapse?
Here is the bottom line.
There is going to be a new solution come to domainers that will
knock PPC out of the box unless things change. I am going to do
everything I can to make that happen until our “Partners” act like
partners. Until then, they have REAL REASON to be concerned. PPC
companies provide a service, but without our traffic they have
nothing. Is that service really worth 50% of our revenue? 35%?
Until now we have seen huge growth in the PPC companies. It is
the domainer fueling their growth while sacrificing our own. Ya think
a PPC company running a show will say stuff like that?? They will do
nothing but protect their revenue streams.
I think the biggest problem is
coming. What will happen to these companies when the majority of the
traffic they have is no longer accepted? It’s going to be
ugly, very ugly. Consolidation is coming. Crazy talk you say? Tell me
that a year from today! Tell it to your families when the checks keep
getting smaller. Why do I say this? Because I believe it and
regardless of what others do, I am preparing for it. All I can say, is
I hope I am wrong. I really hope I am wrong. I would rather be laughed
at for being wrong than go through what I see coming.
I have not even mentioned registrars
that are abusing domainers in ways that I just can’t believe.
Now they want to grab your expiring domains and keep them for
themselves instead of releasing them to the market place. Does anyone
in this industry know what conflict of interest is? Maybe they
will conveniently forget to send you all those reminders to renew. If
they can get your prize domains, is there a reason for them to go out
of their way to notify you over and over again to renew a $7
product that may be earning thousands or worth millions?
All I can say is it is time for domainers to grow some balls and stop
remaining silent. In my life I have watched pilots lose control of
the airline industry and look what we have. I have watched doctors
lose control of the medical industry and look what we have. I have
watched teachers lose control of the education system and look what we
have. Domainers are about to lose control of the domain industry and
look at what you HAD!
session at T.R.A.F.F.I.C.
Orlando May 2008
Journal: Networking, the opportunity to interact with
fellow domain professionals as well as people from related industries
like search and development who can help you further your own
business, remains the primary reason most people attend T.R.A.F.F.I.C.
How will networking opportunities be facilitated and enhanced at the
2008 New York show?
Neu: We will once again have at least one and possibly two
speed networking sessions that we have developed and others have
copied. We are making sure that the hotel has a number of areas where
people can sit and talk business and make deals in 7 and 8 figures. We
are planning parties with TrafficZ and Parked where the
music and noise will not be so loud that you cannot hear yourself, let
alone the person attempting to shout in your ear as is prevalent in so
many other shows. We are reserving break-out rooms for any person or
company that wishes to rent for a day or 1/2 day during the conference
to meet with customers and make deals.
Schwartz: Howard and I have made a concerted effort to
bring in Search people and publishers. We are working directly with
the folks that put on the SES show as well as Webmaster
World. Once folks are exposed to what we do it takes away many of
the stereotypes they have heard and real business can be done. So
those coming to New York will be meeting new faces with new
solutions and that is what it is all about. Besides that we are
working on other “Outreach” programs to include more and more
sectors. Something we don’t advertise. But we spend money trying to
include their sectors.
Journal: It’s clear you are not standing pat while
external forces have changed. You have opened up the live auction
platform to multiple players, opened sponsorships up to competitive
bidding and moved the show itself across the bridge from Manhattan
to Brooklyn. Tell us about the reasoning behind these moves and
why you think it will make things more interesting and the trip to New
York worth making?
Schwartz: Folks think that New York has many hotels to
choose from. That is not accurate. Only five hotels in the city
can meet our needs. The Hilton is not available for the dates we
needed this year, last year or next year. The Sheraton is just a dirty
hotel that is unfit for a T.R.A.F.F.I.C. event in my opinion. The
Hyatt that we were at last year had several shortcomings plus
they had a problem telling the truth. Additionally, employees of
the hotel had sticky fingers and stole from the exhibitors like Rebel.com
who were giving out genuine CROC sandals to the attendees. The
Hyatt took no action even though an eye witness made a police
report identifying hotel workers with the theft and making Rebel jump
thru all types of hoops and waste time to make reports that the Hyatt
failed to act on. Howard and I actually reimbursed Rebel for their
loss when the Hyatt refused to. The Hyatt was the single worst
hotel we have ever worked with on multiple levels.
Meanwhile the Marriott, which is actually
in walking distance of Manhattan and directly across from the Financial
District, is a 4 diamond award winner that has recently been
completely renovated. Plus the food will be much better. Nobody does
it better than Marriott. We would have picked the Marriott last year
but decided the first T.R.A.F.F.I.C. should be in Manhattan.
As for opening things up...not an easy
decision to make but T.R.A.F.F.I.C.
is in business to further the industry not just further the interests
of one sponsor or one company. Opening things up will make this
year’s show even better than the last one. The excitement level is
already off the chart. Having multiple companies promoting multiple
auctions can only increase awareness of the domain channel. Competition
makes everyone raise their game a notch and the marketing efforts as
well. Moniker will still have the “Premiere” auction but Rick
Latona is going to raise the bar for everyone. I can’t say all
he has planned, but it is significant. It starts with the 2008
champion auctioneer that will be calling the action. This guy won’t
be putting anyone to sleep. It will be hard to keep pace. Things are
going to move VERY fast and the excitement level will be something
that will be talked about after the show.
at the Brooklyn Bridge
Site of T.R.A.F.F.I.C. New York 2008
I also know that Ammar Kubba and
his Thought Convergence crew are all over this with their new Aftermarket.com
brand that will make its debut in New York. All three companies
will offer online bidding as well. I am sure Monte Cahn
(Moniker CEO) has heard the chatter and I am sure he and his crew will
rise to the occasion. They are not going to relinquish their lead
without a fight.
So this is shaping up to be a very
interesting set of circumstances and attendees are going to be part of
the single most exciting event the industry has ever seen. It is going
to be a spectacle that will be talked about for a very long time. Once
again it is Howard and I that are taking the risk to break the
status quo. T.R.A.F.F.I.C.
has set the tone and direction of the industry since 2004
and everyone else always plays catch up. It is not by accident. Of the
175 or so speakers we have had at T.R.A.F.F.I.C.,
almost every single one spoke at T.R.A.F.F.I.C.
first. That’s leadership. That’s trailblazing. That’s making a
difference. Same with the topics discussed at T.R.A.F.F.I.C.
and then repeated at other venues.
As for sponsor bidding, it just opens
things up for more competition and also new companies coming into our
industry. I believe the bidding will heat up after each show and I
trust the market itself to find the right pricing levels.
Neu: New York City is comprised of five Boroughs, not just
Manhattan. Our venue was picked because it is the absolute closest
venue to the Financial District, China Town, Little Italy and all of
the other attractions that New York has to offer. It is literally a
five-minute drive or 15-minute walk to Wall Street. It has the added
attraction of certain clubs and restaurants that can only be found in
Brooklyn, which has become the place to be for "New Yawkers".
Schwartz and Ammar Kubba
of Thought Convergence (TrafficZ)
Journal: Another thing that has changed since last year is
that the parent company of your lead sponsor TrafficZ (Thought
Convergence) purchased the parent company of the Domain
Roundtable conference (Name Intelligence), putting
TrafficZ/TC directly into the conference business. How will this
affect their involvement with T.R.A.F.F.I.C. going forward?
Schwartz: We have a very good working relationship with
TrafficZ and I expect them to be involved with T.R.A.F.F.I.C. for years
to come. Let’s face it, we have helped to lift companies to higher
levels. Some forget, some don’t. Ammar does not forget. He
came to our 2005 show in Las Vegas in a van. T.R.A.F.F.I.C.
helped to transform his company and for that we
| have a special
relationship and friendship. It is really what we want to do for all
companies that participate in T.R.A.F.F.I.C.. Help them do more
business and grow their companies and in turn grow the industry.
Neu: TrafficZ has been a great partner for the last two
years in helping to make each T.R.A.F.F.I.C. a success. They have been
easy to work with and their word, unlike others, is gold. They
have pledged to us that they will do nothing to compete with
T.R.A.F.F.I.C. and will schedule Roundtable so as to not affect
attendance at T.R.A.F.F.I.C. Whether they intend to continue to be our
prime sponsor is up in the air, but I'm sure that we will be the first
Journal: While a Roundtable produced by TrafficZ/TC
represents a change of ownership rather than the introduction of still
another new conference, at least one new show is planned for 2009
during Mardi Gras in New Orleans (produced by Parked.com
and their sister company, Modern Domainer Magazine).
You’ve obviously been hearing about “show fatigue” as the
conference calendar has filled up in recent years. How do you combat
that and persuade people that it is worth traveling to another
conference and to T.R.A.F.F.I.C. specifically?
Schwartz: I am going to do what nobody else will. I am
going to speak out and share what I see even when it is not
popular. T.R.A.F.F.I.C. is the only show for domainers run by
domainers. Do folks really believe a PPC company is going to bring you
the next big thing that will earn domain owners more money at the
expense of traffic to their platforms? So right out of the gate our
motive is to find the best solutions and their motive is to keep you
where you are.
Show fatigue sets in when you waste
your time and accomplish nothing. T.R.A.F.F.I.C. may be a lot of
things, but wasting time is not one of them. Amazing how the top
players in the industry just keep coming back. They don’t do it for
their health. They don’t do it to be cool. They don’t do it
because they are bored and have nothing better to do. They do it
because major deals are struck at T.R.A.F.F.I.C. and everyone
knows that is what sets us apart. When you bring great people
together, great things happen. I have said this from the very first
show and that is still the “pixie dust” that makes T.R.A.F.F.I.C.
king of the hill despite all the challenges we have had. There is just
something in our formula that nobody has been able to duplicate even
though they have tried and tried.
Neu: We are looking forward to Parked's Mardi Gras
conference and have spoken with them that we intend to be there
and partake in the festivities. I have been to New Orleans, but never
during Mardi Gras. It is planned primarily as a party and social
event and will not be competing with T.R.A.F.F.I.C. in any way. As
the industry changes, so does T.R.A.F.F.I.C. to reflect those changes.
That is why we are always at least one step (and frequently more than
one step) ahead of any so-called competition and will continue to be
the "Gold Standard".
Journal: I mentioned show fatigue as a syndrome some show
goers have reported, but how about the two of you? You got the
ball rolling in the fall of 2004 and you have been producing major
shows non-stop for four years now, maintaining a very high level
quality with each outing. Yet you also have other interests to take
care of including your own domain portfolios, other business interests
and your families. Rick said he was ready to step away after the
crowning success of New York 2007 but later decided
| he wasn’t ready
to ride into the sunset yet. How have you avoided burnout, kept your
energy level up and what motivates you to keep doing it (some will say
money of course, but both of you can live comfortably the rest
of your lives without the conference business)?
Neu: Thank you for the kind words. Contrary to some
opinions, we DO work hard at keeping T.R.A.F.F.I.C. the best in the
business. It might sound trite, but we really get a thrill
seeing people succeed in this business because they attended one or
more T.R.A.F.F.I.C. Shows. We are also pleased that our primary
sponsors and partners like Domain Sponsor, TrafficZ and Moniker have
become bigger and better due to their association with
T.R.A.F.F.I.C. Now that we are licensing shows to other
countries, with the first being T.R.A.F.F.I.C.
Down Under (coming up Nov. 18-20 on Australia's
Gold Coast), put together so ably by Dan Warner and his
crew at Fabulous.com, that T.R.A.F.F.I.C. has now become the
international Gold Standard for trade shows around the world. I am
really excited about going to Australia in November to see how others
have taken our product and moved forward with it in other venues.
We are also looking
forward to T.R.A.F.F.I.C. West 2009 as we return to the Silicon
Valley in April to spotlight Developers and SEO-SEM at the
Schwartz: We live and breathe domains. I still wake
up before 6AM every day. I am excited to get up in the morning
and see what each day brings. Burnout comes and goes but for whatever
reason I am driven to get to a higher ground. To have domains
recognized for the value they posses. The great luxury of being
a domainer is when you do have burnout, you can get away and recharge
the batteries. My batteries are fully charged and can’t wait
to have our best show ever in New York.
||We never started T.R.A.F.F.I.C.
to make money and we won’t end it because of the money. Howard and I
have taken over half a million out of our pockets to promote and
further the industry. We did not have to do that. But there is a
higher calling here. It is partly selfish because I am doing
everything I can to raise awareness and values of my own portfolio
which in turn raises the value of everyone’s portfolio. That said,
T.R.A.F.F.I.C. won’t go on forever. It IS a limited edition. I
am signed up until we have our Orlando show in January 2010.
Then we will see where we are, if the original mission has been
accomplished and decide to do more or just ride into the sunset……….