November-December 2013      DNJournal.com      The Domain Industry News Magazine

The DN Journal Newsletter is sponsored by Escrow.com, Making the Global Market a safer place, since 1999.

Welcome to DN Journal Newsletter #64! This publication is sent only to subscribers who registered at DNJournal.com to receive our free newsletter and email notifications when new articles are posted on our site. You may unsubscribe at any time by sending a removal request to editor@dnjournal.com.

Broker of the Year Award Winners & Nominees From Sedo Provide an Inside Look at the Business of Buying and Selling Domains

After a long recession the domain aftermarket began bouncing back in a big way in 2013. With PPC revenues still down from their historic highs, domain sales have become increasingly important to large portfolio owners. 

That emphasis on sales has also put domain brokers on center stage more than ever before. Sedo is fortunate to have some of the best ones in the business, including Negar Hajikhani who won T.R.A.F.F.I.C.'s 2013 Broker of the Year Award, Dave Evanson, who won the same honor in 2012 and was nominated again in 2013, and Brian Michitti, who was nominated for the 2013 award. Two former Sedo brokers were also among the 2013 Broker of the Year nominees. 

With the increasing reliance on successful domain brokers, I connected with Negar, Dave and Brian to get their insight into what you might call "the art" of domain brokerage. 

 

 

Image from Bigstock

DNJournal.com: As successful brokers you have all reached a level that many others aspire to. What personal and business traits do you think have contributed to your success in the field?

Sedo's Negar Hajikhani
2013 T.R.A.F.F.I.C. Domain Broker
of the Year Award Winner

Negar: I think my varied background and international experience are my biggest strengths and have contributed most to my success as a broker. I studied International Business Management with a special focus on Asian Pacific Management. I know how vital it is to value cultural diversity in order to succeed in an international market. I truly enjoy communicating between different countries and cultures. I was born in Iran, grew up in Germany, and I spent large parts of my studies in China (I now speak four languages fluently). When interacting with clients, I look to develop personal relationships. I donít look for the hard sell, but rather listen to my clients and try to achieve their domain needs. I am told that I have a quirky and endearing German accent when speaking any of these languages, which clients find intriguing.

Dave: I like to think that my daily work ethic demonstrates to clients that I am driven to succeed, persistent, diligent, persuasive, trust worthy, loyal and obedient. I bring 35 years of high level Fortune 500 Marketing, Strategic Planning and Management Consulting to the table. This coupled with extensive domain brokerage experience since 1999 enables me to be a top producer and contender for the larger and more complex deals.  I push myself all of the time. I always have. I recently set a goal to broker at least $20 million per year for five years straight. Itís an aggressive goal, but I figure that since most of my engagements are referrals these numbers are doable if I remain focused on delivering the needs of my clients. 

Brian: I would point towards a mixture of luck, resourcefulness, and persistence--bordering on stubbornness. But I certainly have to say luck has been a big contributor to where I am now. Actually, I first came to Germany to play American Football after turning down a job offer from Morgan Stanley. A lot of people in my close circles probably thought I was crazy, but I had a plan the entire time and I was stubborn enough to ignore the naysayers, do what I thought was right, and come out happier in the end.  After a whirlwind of events I parlayed football in Germany to another job in Belgium that took me to projects in Africa, Russia, and the Caribbean. I got lucky to meet some of the right people and that brought me full circle to Sedo. I encountered numerous challenges along the way and I have been able to incorporate experience from all walks of life into who I am now and my work as a domain broker.

DNJournal.com: In addition to have a lot of top brokers now, Sedo was the place where many brokers now working elsewhere got their start.  What has made the company such a productive training ground for domain brokers?

Negar:  I have had the luxury to be a part of a company that has been an active participant in the evolution of the domain industry. Sedo was established more than 13 years ago and I have been with the company now for almost five years. Thereís a great sense of teamwork at Sedo; we all work great together and learn a lot from each other. As the largest brokerage in the industry, Sedo is a natural starting point for prospective domain purchasers, so as employees, we are fortunate to benefit from being a first industry touch-point for many clients. Being involved in big deals is a great experience for some of our younger brokers to learn from our veterans and see how deals materialize. In addition to having an excellent team of brokers that shares thoughts, ideas and experiences, Sedo's expertise extends to all areas of domain monetization. Our brokers collaborate with colleagues in all aspects of the business, which gives us increased understanding of the industry and of our clientís needs. 

Dave: We put brokers through extensive training for a few months when they come on board. They are taught how to valuate domains, find domains, negotiate on behalf of clients, and close deals. They are provided with legal and operational training plus are expected to know how our internal databases and related tools work. They typically spend some time mirroring a customer service rep, account manager, product manager, and domain transfer agent. Then they work closely with a Senior Broker for nuts and bolts training as they move into their own transactions. 

Sedo has 2 million customers and does millions of dollars in escrow and transfer monthly. Brokers have the tools to perform for their clients and before you know it the new brokers are regularly closing deals and plenty of them. They get ongoing feedback from within and are tasked to improve and grow.

Brian: Again, I think this is a mix of a few factors. One, the brand name certainly helps, particularly when you are communicating to end-users, but I think it also contributes to attracting talent to the industry. Two, there is a wealth of experience and resources floating around the company. So when I have an issue or need to bounce an idea off someone else itís great to be speak to Frank (Tillmanns), Stephan (Hauf), or Marc (Stepken), as well Kathy (Nielsen) also has a lot of great experience and insight. And if there is a language issue I am never more than a few minutes away from being able to talk to someone and solve it. If you couple that in with a large database of

Sedo's Dave Evanson
2012 T.R.A.F.F.I.C. Domain Broker
of the Year Award Winner

 

information and our ability to offer a one-stop shop solution, I think that we are in a good place to foster talent.

DNJournal.com:  Brokers in other fields are usually dealing with assets that have widely known and accepted value points (as in traditional real estate where there are many comp sales in the immediate neighborhood that establish values). With domain, value is often in the eye of the eye of the beholder and buyers and sellers seldom see eye to eye. Does that make domains a much harder asset to broker than other assets?

Negar:  It is not necessarily harder, but I agree there are unique challenges for domain brokers.  You definitely do need an excellent understanding of the industry in order to successfully sell domain names. One of the advantages we have at Sedo is that we are the largest domain marketplace and process more than 40,000 sales a year. This means that although domain sales don't have the recognition that traditional real estate does, we are able to draw upon a large amount of historical data to help facilitate a sale. The fact that Sedo is one of the longest established players in the market means that we are able to demonstrate objective valuations to buyers and sellers, and a level of trust already exists with our clients.  

Dave: Domain valuation continues to be one of the toughest aspects of domain brokerage.  Not only is it somewhat subjective but it is also often driven by the motivations and expectations of the buyer and/or seller.  The valuation exercise varies greatly when working with people who have sophistication around domains vs. those that are inexperienced or even kind of clueless. Further, while I focus on end user sales there are typically retail and wholesale (i.e., domain investor) valuations for domains. Fairly often one side in a deal is thinking retail pricing and the other side wholesale. Sometimes buyers and sellers are so far apart it takes time and work to get them on the same page or planet. This makes completing deals more challenging because you canít easily point to comps since many deals (especially higher priced deals) are kept confidential and the published data points can be several years apart.  

Sedo's Brian Michitti
2013 T.R.A.F.F.I.C. Domain 
Broker of the Year
Nominee

Brian: I think that the domain industry is an animal all to itself.  So while there are some comparable factors to other industries, in the end the domain industry and the accompanying brokerage has a lot of factors that make it very unique, and make it difficult to compare.  For example, the real-estate industry is a common comparison. However, the real-estate industry has been around much longer so it offers more credibility to an outsider as it is easier to research, compare prices, and look at alternatives. It offers more infrastructure in terms of creating deals, and a market with less variability from comparable assets. Domains and real-estate are not an apples-to-apples comparison because real-estate normally involves a number of other factors and parties that are outside of the brokerís control, other than just seller-broker-buyer (i.e. Banks, interest rates). I have trouble finding a fair comparison because the domain industry is the only place where you have individuals making deals with large end-user clients on a daily basis. It is the only place that you can have a buyer with a budget in the low five-figures turn in to a seven-figure budget in a matter of weeks. So to me, it is not easier or tougher, it is a game all unto its own. For me personally it is like comparing Football and Rugby, and asking which is tougher. The balls look similar, men tackle each other, and you are trying to score a touchdown---but thatís where the similarities end. After that, all of the variables start to make the games completely different.


DNJournal.com: Youíve been involved in many important transactions, do you have a favorite among those and if so why?


Negar:  After almost five years with Sedo and lots of interesting deals it is tough to choose a single one over all the others. What I have found most interesting over the years is working along the entire spectrum of clients Ė from young start-up companies all the way to large international corporations. It is fascinating to help start-up companies find the perfect domain name that communicates their brand new ideas to the world and helps them grow. Large corporations, on the other hand, already have their own domain name, but are often looking to add more variety to their product line and web presentation. Guiding them through this intricate process can be a very interesting and rewarding experience. My favorite challenge is usually negotiating deals between different countries in a different language. For example, the sales of 606.com and yiwanfuweng.com (the Chinese version of billionaire.com), I had to negotiate from start to finish in Mandarin. That was not always easy, but thanks to my international business background and my work experience in China it all worked out in the end.  It also turned out to be important to be aware of the symbolism of numbers, words, and characters in different cultures, especially when appraising the value of a foreign domain name. Since ď8Ē is a lucky number in China, and ď28Ē means ďdouble luckĒ, the owner of the domain 28.com is likely a very lucky person. Knowing all of these hidden meanings and cultural differences makes these kind of negotiations both hard and interesting at the same time.

Dave: Usually the most recent transaction I complete is my favorite. When I think about the most interesting transaction I think back to last year when I had four potential buyers bidding against each other for a premium domain I was brokering for the seller.  We received one offer after another in the low $xxx,xxx range and since the seller was nervous the domain wouldnít sell, he wanted to make a deal immediately. Every time I brought another higher offer I had to convince him to keep negotiating rather than selling.  The name ultimately sold for close to $300,000, which was well above sellerís expectations.

My first two transactions shortly after joining Sedo three years ago were favorites too.  One was Ringtones.com for $750,000 and the other was kept confidential but it went for over one million dollars.

Brian: Itís tough to pick a favorite one. I really liked a Moneta.com because I met with the buyer and seller in person and everybody walked away happy. Just before that one I closed a very large one (7-figures) and that was great because of how complicated it was and how 

Dave Evanson

quickly we brought it together. But actually the one that stands out to me the most is Donuts.co, which I helped Donuts Inc. acquire.  At the time I was fairly new at Sedo and I remember wondering what they were going to do with this name.  Little did I know that they were going to go so heavy into the gTLD program and become a brand name in the industry.

DNJournal.com:  In recent months we have seen a nice surge in higher end sales. What is your take on the state of the domain market today and where it may be headed Ė particularly with respect to how the impending arrival of hundreds of new gTLDs may affect the aftermarket?

Negar: The domain market is very healthy and sales are consistent. The arrival of new gTLDs is going to help the aftermarket and bring in new buyers. In general the economy has improved and consumer confidence is increasing. I am also very excited about our new gTLD services as it generates many new opportunities for our industry. I do expect the market to become tougher after that and there are some clouds on the horizon due to the onward march of technology: Increased use of smartphones and tablets using apps to directly connect businesses to consumers and also search engine adoption of Natural Language Processing (NLP) is advancing to the point where they understand the full meaning of phrases and can more effectively match their customers to websites or apps. Less confusion in the search space could also reduce the demand for domains as smaller operators are pushed out internet commerce in particular. But these are just some bumps in the road that weíll have to navigate. 

Sedo's Negar Hajikhani (4th from left) accepting the Broker of the Year Award 
(the first female to win the honor). - See more at: http://www.dnjournal.com/cover/2013/november-december.htm#sthash.awVyd6E4.dpuf
Sedo's Negar Hajikhani (4th from left) accepting the Broker of the Year Award 
(the first female to win the honor). - See more at: http://www.dnjournal.com/cover/2013/november-december.htm#sthash.awVyd6E4.dpuf
Sedo's Negar Hajikhani (4th from left) accepting the Broker of the Year Award 
(the first female to win the honor). - See more at: http://www.dnjournal.com/cover/2013/november-december.htm#sthash.awVyd6E4.dpuf
Sedo's Negar Hajikhani (4th from left) accepting the Broker of the Year Award 
(the first female to win the honor). - See more at: http://www.dnjournal.com/cover/2013/november-december.htm#sthash.awVyd6E4.dpuf

Sedo's Negar Hajikhani (4th from left) accepting the 2013 
T.R.A.F.F.I.C. Broker of the Year Award (the first female to win the award).

Dave: There are many positive indicators for the domain market today. I think it will continue to trend upward with very large sums of money flowing into the industry from pockets of wealth around the globe.  I see .com, in particular, and some other current extensions remaining strong but I also expect to see some new extensions emerge over the next several years.  I know Sedo has been actively gearing up to provide a broad array of services in and around the new gTLDs space, which will certainly mark a new chapter in our industry and create new opportunities.

Brian: This is a complicated question that I could spend a long time answering, but Iíll do my best to keep it concise. I think there are a number of factors that relate to the surge in sales, and it all centers around a decreasing amount uncertainty. If we look at it from a Macroeconomic standpoint, the world economy seems to have stabilized and conversations of potential growth 
are in the air, which I believe is a contributing factor to people being more willing to spend higher amounts. Two years ago there were a lot more questions regarding the economy floating around than there are right now---and perhaps itís a good sign we are not out of the dark quite yet. On a micro level, I think that there were a lot of questions about the effect of new gTLDs  keeping a lot of potential players on the sideline.  They did not want to make a move because of the opinions and hyperbole that was being thrown around and the just needed time to sort out their own opinions and create a game plan to go forward.  Regardless of your personal opinion of what the outcome of the new gTLDs will be, a lot of others have made up their mind to a point that they feel confident enough to make some kind of move.  Thatís important because as the smoke is clearing people are able to make a decision, which means they are getting back in the game.  Throw in a robust Chinese aftermarket that has been contributing to some nice sales and you have a steady market with some apparent surges.

Image from Bigstock

Since itís probably a bit too complicated to predict the world-economyís domino effects on the domain market, I will assume it as a constant.  If that stays true I believe we are going to see a continued robust secondary market fueled by a lot of new players and awareness brought to the industry from the press surrounding the gTLDs.  In the long-term I believe there will be a few new extensions that will thrive and extensions like .net and .info will struggle.  Brandable ccTLDs, like .tv, .me, and .it will benefit from the new gTLDs. But for the next 5+ years, .com will continue to be the king.  

*****


Thank you for requesting our newsletter, reading and continuing to visit us at DNJournal.com. Your support is truly appreciated!

Sincerely,
Ron Jackson
Editor/Publisher
DNJournal.com

 
The DN Journal Newsletter is produced by DN Journal - The Domain Industry News Magazine located at www.DNJournal.com. Contents may not be reproduced or redistributed without expressed written consent from Internet Edge, Inc. (Copyright 2011)

You may unsubscribe to this publication at any time here

Hit Counter