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).

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.

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.

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