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Peter
Hutto
VP, Local.com |
Hutto
said Local.com is continually adding content including local
ratings and reviews. He noted that the company sees a special
opportunity because giant search engines Google and Yahoo!
don't
quite have local search down yet.
Hutto said 80% of people's
income is spent within 50 miles of their homes and less than 5%
of the potential market has been reached to date, leaving room
for spectacular growth in the years ahead. Local paid search is
expected to hit $2.44 Billion by 2008 and his company plans to
take a large slice of that pie.
After
breakfast it was back to the seminar room where Dan Warner was
back to deliver a talk on domain analytics. Fabulous.com has done
exhaustive research on millions of domain names over the past four
years (including the more than 500,000 in their own portfolio)
giving Warner a wealth of knowledge that makes him one of the
industry's most valuable resources.
|
Warner
is able to deliver hard
statistics on how various domain categories perform by any metric
you might care to measure them. His presentation needs to be seen
to be fully appreciated and it may be available online soon. We'll
add a link here when it is posted.
Next
up was one of the most interesting financial seminars of the week
featuring Doug Burke, Managing Director of Software and Services
for PageMill Partners LLC (an M&A specialist based in Palo
Alto, California) and Jordan Rohan, Managing Director of
RBC
Capital Markets.
Jordan
Rohan (L) comments as Doug Burke of PageMill Partners looks on.
Rohan proved to be an especially timely guest. A
noted stock analyst who covers Google, Rohan was quoted on the
front page of USA Today Wednesday morning (on the plunge in Google
stock when earnings had come out the day before), the same day he
took the podium at T.R.A.F.F.I.C. Rohan
probably knows more about the domain channel than any other stock
analyst working today. He was a vocal supporter of Marchex when it
was $14 a share and predicted the run up to $24 that followed. He
predicts the company will be worth $1 Billion by the end of next
year and is looking for the stock to hits $30. Rohan also believes Marchex
got an exceptionally good buy with their $164 million purchase of
the Name Development portfolio last year.
 |
Rohan
sees domains as a very attractive industry but he also expressed
the belief that current owners should consider taking some money
off the table. There are always unforeseen risks and Rohan said
that in this space the most likely disruption would come from an unforeseen
technological change of some kind. Diversifying is the only way to
protect yourself against that. Rohan also believes in developing
content for your domains. He predicted that within the next few
years all sites and individual pages would be ranked according to
their content and you will have no chance for a good ranking
unless you have competitive content on your domains. |
| Rohan added that
people who use sites are the most valuable asset and domains that
come with those users will be the ones sought out by buyers.
Burke
also recommends diversification of your assets by selling some and increasing the value of those you hold by building
businesses on them to prove their viability. He noted that history
shows that many got better deals in the early stages of
consolidation (where we are now with domains) than those who sold
later in the cycle.
With
the increasing value of domains drawing more and more interest
from entities who would like to take them away from you in any way
they can, seminars featuring top domain attorneys are always a
highlight at T.R.A.F.F.I.C. and Silicon Valley was no exception. |
Doug
Burke
PageMill Partners LLC |
The final morning session Wednesday brought three of the best
together for a lively panel discussion. Paul Keating of RenovaLtd.com,
Steve Sturgeon of DomainNameLawyers.com and Ari Goldberger of
ESQWire.com fielded questions from the capacity crowd.
Left
to Right: Paul Keating, Steve Sturgeon, Ari Goldberger
Some
of the many interesting points they made included these:
-
UDRP
panels have ruled that owning thousands of domains is a
legitimate business.
-
UDRP
proceedings are a good thing because they keep domain owners
out of far more expensive federal court proceedings which can
cost $200,000-$300,000 to defend.
-
Never
default on a UDRP filing or lawsuit as this can permanently
label you as a cybersquatter.
-
Don't
let your guard down if you win a UDRP decision. Either side
can still file suit in a federal court and a second UDRP
action could even be filed if you infringe on a TM after your
victory.
-
Be
careful about the links that appear on your parked pages. Even
what seem to be generic domains can be lost to obscure TM's if
offending links appear.
-
Be
leery of signing settlement agreements that say you agree not
to register other infringing domains. The company may have
trademarks on dozens of other words you are not aware of. Have
your attorney review any such agreements before sigining.
-
If
you get a C&D letter respond promptly (within 7-10 days at
most). Make a quick decision on whether the domain is worth
enough to offset attorney fees or should just be given up.
-
Business
insurance can be purchased to cover potential trademark
infringement legal costs. Be sure to look at policy exclusions
to make sure you have the coverage you want included.
After
the attorneys session, I had the honor of speaking at lunch where
I gave the audience some information on the role DN Journal plays
in covering the industry, the kinds of stories we are looking for
and the value of using our weekly domain sales reports to provide
comparable prices when negotiating sales or purchases. It has been
gratifying to see our reports cited in many major mainstream media
publications because that attention has helped bring new
participants into the business, an essential ingredient for any
industry's continued growth.
| On
another topic, I noted that I am frequently asked if it is
"too late" to get into the domain business. My answer in
unequivocally "no, it is not too late." Your path
to success may not be the same one the industry pioneers took to
get where they are. It takes a lot of money to play at their table
today. But there are endless niches and new opportunities in this
field where you can find a profitable home. It might be in new
extensions, country codes or IDN's. It might be with .coms in a
niche area where you have special knowledge others lack. It could
be in domain development which almost everyone seems to be
pointing to as the new land of opportunity. We're still just in
first inning of the Internet game and a tremendous wave of growth
is headed our way, so grab a board and enjoy the ride! |
 |
|
Rick
Latona (standing) asks a question from the floor during a
seminar at T.R.A.F.F.I.C. Silicon Valley |
Before
heading back to the seminar room for the afternoon sessions, I
chatted with Rick Latona of DigiPawn.com who has enjoyed a tremendous
amount of success in a variety of Internet endeavors. Latona just
bought Brown.com for $300,000 and told me he expects to announce
at least $5 million in new purchases in 2006.
Latona is always
thinking outside the box so I always find it interesting to hear
what he is working on. He has a popular offshore staff leasing
service at iWebmasters.com that will be renamed to Offshoring.com
soon. In conjunction with the rebranding, Latona will be at future
conferences to show domain owners how they can get their names
developed inexpensively by outsourcing the work. |
The
first afternoon seminar Wednesday featured "Success
Stories" and provided further proof that opportunities
continue to abound in the domain business. The panelists included
Andrew Miller and Mike "Zappy" Zapolin, partners in the
wildly successful Internet Real Estate Group LLC (and keynote
speakers at the October 2005 T.R.A.F.F.I.C. conference in Delray
Beach), Jeff Bhavnanie from Ashanti PLC and Russ Goodwin of the
Tidewinds Group.
|
Mike
Zapolin
Internet Real Estate Group |
Andrew
Miller
Internet Real Estate Group |
Miller
and Zapolin have been involved in a number of multi-million dollar
domain acquisitions and sales. They are in the process of rolling
out their newest baby, Software.com. They plan full development of
the domain as Zapolin said software represents the perfect
product, with no physical inventory or shipping costs to deal
with. Miller and Zapolin also love the versatility domains provide
as opposed to conventional real estate to which they are often
compared. They noted that with domains, the value is in the
"raw land". Zapolin said "if you put up a condo and
later find you should have put up a hotel, it's easy to
change."
Jeff
Bhavanie (L) of Ashanti PLC with
Russ Goodwin of the Tidewinds Group |
Bhavanie
noted the incredible value of leads that can be generated from a
good generic domain. His brother is involved in manufacturing in
Asia so Bhavanie gave him a related lead that came through his
CellphoneAccessories.com site. His brother told him that one lead
resulted in more than $2 million worth of business in the last 8
months. On a PPC page, the click might have generated 10 cents!
Fireworks
were assured during the next session on "Domain and Portfolio
Valuation" because the panel included Rick Schwartz, who can
always be counted on to speak his mind and let the chips fall
where they may. |
|
Schwartz was joined by
Afternic's Roger Collins,
Moniker's Monte Cahn and Sedo.com CEO Matt Bentley.
Schwartz
quickly attacked the notion the financial analysts had advanced
that "risk" limited how far domain values could rise.
Schwartz told domain owners in the audience, "You guys have
already taken the risk. Now these guys show up 10 years late and
want what you have!" That drew a round of applause and
Schwartz was just getting warmed up.
"There
are 6 billion people on this planet and only about 300 have
figured it out. Do the math on that!" Schwartz said.
"The only way to acquire many great domains today is to buy
the entire company that owns them. Bank of America paid $3 million
for Loans.com. Domains like that will never be on the market again
in our lifetime. You would have to buy Bank of America to get
it!"
Schwartz added, "The
#1 factor in value is the idea
behind a domain. These people tell you to sell for 5X or 7X
PPC earnings. If you do, it's a bad deal for you. You have
to look at what that domain could be worth 5, 10 or 20 years down
the line. If you had sold your domains for 20X earnings five years
ago you would be very regretful today."
|
Rick
Schwartz
T.R.A.F.F.I.C. Co-Founder |
|
Matt
Bentley- Sedo.com CEO |
Matt
Bentley
just completed some extensive research on a database of more than
25,000 actual domain sales (combining data from DN Journal with
Sedo's own sales records). He released his findings in a
fascinating presentation that showed sales results from many
different viewpoints, including values based on extension, domain
length, the number of keywords in a domain name, by Overture
score, etc.
One surprising finding was that there is only a weak
correlation between the amounts paid for domains and high Overture
scores (which have always been viewed as a predictor of traffic
and thus domain value).
Bentley
is planning a press release soon that will summarize his findings.
We can't do justice to his research in this general show overview,
so we will save that information for a separate story when Sedo
releases his sales analysis.
|
| For
the next seminar, Bentley stayed on the dais where he was joined
by Peter Lamson, the VP and General Manager of BuyDomains.com, for
a session on Domain Sales.
Lamson, who just joined BuyDomains
three months ago (and also serves as GM of the company's parent
entity, YesDirect) said the company's sales volume has jumped
58%
this year. Lamson said "The next wave in demand will come
from small business." That belief stems from these
observations from recent research:
-
79%
of small business owners expect business to improve in 2006
-
61%
believe the Internet has opened new markets for their
businesses
-
57%
believe the Internet has reduced their cost of doing business.
-
56%
of U.S. small businesses do not have company websites yet.
-
38%
plan on building and launching websites in the next 6 months.
|
Peter
Lamson
VP & GM, BuyDomains.com |
|
Robert
Alfano
DomainCapital.com |
Among
those asking Lamson and Bentley questions from the audience was Robert Alfano of
DomainCapital.com. He and partner Gregg Freeman,
who was also at the conference, are running the first company in
the space that is financing domain purchases. In fact, they were
involved in providing financing for Escom LLC's recent
multi-million dollar purchase of Sex.com. You'll be hearing much
more about them in the future as they are opening up a new range
of options for domain owners and investors.
With
the curtain falling on the final seminar of the Silicon Valley
show, attendees headed for a cocktail party to enjoy more good
food and drink and each other's company before heading their
separate ways the next morning. I took the opportunity to chat
with as many people as I could and in what seemed to be the blink
of an eye (but was actually 3 hours later), I looked up to find
only about 10 of us still in the room while hotel staff was busy
breaking down tables and chairs around us. |
The
scene reminded me of a great song by Southside Johnny & the
Asbury Jukes called "I Don't Want To Go Home". It also
reminded me of the last thing I had said to the audience when I
spoke earlier in the day. "Whatever degree of success you
eventually reach, I don't think you will find any business
that is as exciting and rife with opportunity as this one, and
more importantly, you will never find a business with so
many bright, engaging and simply good people to be around
day in and day out."
Final
Thoughts & Photo Gallery
|
