-
How
Mercaldo's $175,000 acquisition and development of Scottsdale.com
is working out financially.
-
His
views on the current state of the geodomain business.
-
How
the arrival of new TLDs - with geo strings like .nyc, .london and .paris
may affect .com geodomain owners.
-
How
his City in the Box software turbocharged geodomain development.
-
The
current status of GeoPublishers.com
( the geodomain trade association that succeeded Associated Cities and
which Mercaldo now serves as President).
-
Plus,
Mercaldo's surprising connection to legendary artist Andy Warhol.
Fred
Mercaldo was born in Philadelphia is 1955 where he was raised by his
grandparents, Matthew and Marvel McGeever. "They owned a golf
driving range called Tom Gola’s Driving Range," Mercaldo
recalled. "Tom was a local basketball legend, leading LaSalle to
a national championship, and later having a great career in the NBA -
and he was a partner in their business. The driving range was beautiful with
different levels under the lights, and also an 18-hole miniature golf course.
Every summer we would open the range in the morning, take a break (and a nap!)
in the afternoon, and then head back and operate the range until the last
players left."
|
"My
childhood was great," Mercaldo said. "My grandparents spoiled
me, and from meeting Mr. Gola at an early age, all I ever wanted to do was
become a basketball player. I played all the sports, but had the most
success at basketball." Mercaldo also had dreams of one day taking over
the driving range and keeping the beloved business in the family, but fate
intervened. "Unfortunately my Grandmother passed away when I was 12, and
my Grandfather followed when I was 15," Mercaldo said. "It was a very
sad and difficult time for me. I decided to concentrate on getting into college
and playing basketball at Penn State."
Between
the ages of 10 and 18 Mercaldo proved to be an excellent player in a city known
for its hyper competitive basketball scene. He repeatedly made all-star teams
and led both his team and his league in scoring on more than one occasion.
However, when he arrived at Penn State he found basketball at the major college
level was a different ballgame all together. "In my first year at
Penn State I realized that I did not have the size or talent to go any further.
It was a very big discovery and it greatly affected my future plans,"
Mercaldo said.
In
the classroom, Mercaldo started out as a Psychology major and compiled a 3.2
GPA before switching to Business and Accounting, but something was missing. "Still not stimulated, and depressed that my basketball
career was over, I left school and became a steelworker!," Mercaldo
laughed in
|
On a visit to
the French Riviera last
year Fred felt right at home when he
walked past this shop in Cannes. |
| remembering that sudden U-Turn. "Phoenix Steel in Claymont,
Delaware became my home for the next 18 months. I worked 3 different shifts
and soon realized that punching a time clock was not going to be my
future." |
After
a year and a half, Mercaldo moved on to a less taxing occupation - working for
a company that sold an insurance product to automobile dealers. "After
3 months, the parent company in Chicago made me an offer to relocate and
take over the Wisconsin market and their existing dealer base in
Chicago," Mercaldo said. "I fell in love with Chicago the
moment I landed and stayed for the next 15 years. Within 3 years, I
became national sales manager of the company, and then earned an ownership
position. One thing lead to another, and I had 100 auto dealers handling
our auto service contract program, a program that was affiliated with Merrill
Lynch. It was 1980, I was 25 years old, and making 6
figures per year."
|
|
That's
when Mercaldo saw his first business world curve ball and had his
entrepreneurial skills put to the test. "The prime rate hit 20% and
this affected our service contract sales severely, as they were not
being accepted as part of the finance contract when people purchased their new
cars," Mercaldo said. "My production went from 1,000 monthly
sales to 100 almost overnight. Knowing I had to do
something, I began a Call Center with 7 people - calling people that just
purchased their new car, and offering the service contract/extended warranty. I
also put together a finance plan that allowed them to finance the
contract at $49 per month. This was an immediate success, and the
company grew to 150 employees and lasted until 1989."
The
winds then changed yet again. "Auto leases became more popular and
the price of our service contracts that were $399 in 1980 were now over
$1,000 as cars were more complicated and repair costs soaring.
Over a year's period of time, we went from 3,000 contract sales per
month to 750. It also didn’t
help that I
|
| was no longer physically there. I had a new interest
and when the business finally had to be shut down, I was well into
my second “career”, "Mercaldo said. |
|
Mercaldo's next enterprise
was one that even he would never have imagined. "Almost by mistake, I
embarked on a hobby that ultimately led to a very profitable and exciting
couple of years. I became an Andy Warhol art dealer!,"
Mercaldo exclaimed. Interestingly enough, he said that endeavor had
a remarkable number of things in common with the domain business he
would enter a decade and a half later. |
It
might never have happened if Mercaldo had not decided to find a new
residence in the Windy City. "In 1986, I left one of the best
buildings in Chicago, Lake Point Tower, a 72-story high rise on the
lakefront located at Navy Pier, and decided to renovate a 1926
co-op on Lake Shore Drive. After six months of totally gutting and
rebuilding and redecorating, I moved in but the walls supporting the 3,000
square feet residence were bare. I went to a local art gallery and
while their Warhol print of Marilyn Monroe was desirable at $5,000
(and now worth over $250,000!) I needed more than one print to fill
my walls."
"So
I opted for volume - a new series by Warhol called “Cowboys and
Indians”, a collection of 10 signed and numbered prints with images
of John Wayne, Annie Oakley, General Custer, Teddy
Roosevelt and more for $13,000.
|
A Rupert
Jasen Smith of Andy Warhol |
| The problem was I liked them so much as a
collection that instead of hanging them all over the co-op, I hung them all
in one room! So I went back for more, and by the end of a three
month spree, I owned about 45 Warhols with approximately $60,000
invested." |
"In
February of 1987, Warhol died unexpectedly from complications after gall
bladder surgery and the market for his signed and numbered prints, along with
his originals, skyrocketed overnight. I found myself in New York the
following week, sitting with Rupert Jasen Smith, one of Warhol’s
closest friends and screenprinter. I purchased 99 more Warhols
that day and embarked on a 3 year roller coaster of buying and selling
that took me twice to Switzerland, once for the iconic Basel Art Fair,
and once to meet with Bruno Bischofberger in Zurich, one of the
world’s leading art dealers for the past four decades. I became close
friends with Francesco Scavullo, wound up opening my own
gallery in Chicago, and had a great time along the way," Mercaldo
said.
|
Fred
Mercaldo
at home in Scottsdale |
"One
of the more satisfying results of this successful venture was that I
realized that my thought processes, combined with patience and logic
and a little instinct, served me well. I was afraid that I was only
competent in one industry (auto warranty insurance) but this
endeavor proved that the same principals could be applied to
any business, and it gave me confidence. Little did I know it
was a precursor to 15 years later and domain investing, with many
similarities and parallels."
"In
1989, I closed the auto warranty business and was busy running the
gallery. The Warhol market cooled after a very strong 2-year run and I was
spending my time commuting between my home in Chicago and a beach house I
rented in Marina Del Rey, California. I finally closed the
gallery, put the Warhols in storage, selling a couple each month to pay my
expenses, and was ready to take it easy for awhile," Mercaldo
recalled. "While I had substantial assets, I also had substantial expenses
- something that happens to young guys that make money early!" As
a result, after a nice respite in California, Mercaldo sold his Chicago
house, left the beach, and relocated to Scottsdale, Arizona to
figure out the next chapter in his life.
"In
1996, I started a property management company in Scottsdale,"
Mercaldo said. "Six months per year we rented the properties out to
corporate relocation clients, but in the high season for Scottsdale
(November thru April) we filled them with short term golf packages.
My company name was
Desert Golf & Vacation Rentals, and the best domain name I could get
was Desert-Golf.com! Even early on in the domain business, I had a
hyphen to deal with!." Mercaldo laughed. |
"We
grew the business and merged with another company giving us 310 total
properties, and we had become one of the larger golf vacation and wholesalers
to the Scottsdale golf community. We then made a deal with both Troon Golf
and Marriott Golf that really put us on the map. We produced 500,000
tee times per year, and over $8 million per year in golf vacation
packages."
| Mercaldo contacted the owner of Scottsdale.com and offered them $1,000 per month
to be the site's exclusive golf advertiser and partner, and they
accepted. About a year later, in 2004, the owner of Scottsdale.com approached
Mercaldo and asked him if he would be interested in buying the domain.
"I asked for, and received a 30 day due diligence period, and I’m
embarrassed to say that it took me about 3 weeks to determine that I would go
ahead with the purchase," Mercaldo said. |
|
|
"It took about 12 months
for me to become profitable, and up until the economy changed we thrived.
Real estate, hotel partners, and golf packages were the major sources of our
revenue and we generated between $500,000 to $800,000 per year in
advertising fees and commissions. This all changed when the economy changed,
as my 3 most profitable categories of advertisers: real estate, hotels, and
golf vacations, were the hardest hit industries in Arizona. This led to my
next chapter in business- becoming a development company,"
Mercaldo said. |
"Realizing that advertising was going to be a tough sell in the immediate
future, I knew we had to find another source of revenue to keep the doors
open.
Over the years, in addition to Scottsdale.com, I purchased Tempe.com and
FountainHills.com, and had signed marketing and development agreements with
Mesa.com (Nat Cohen), Chandler.com (DigiMedia) and ApacheJunction.com
(Castello
Brothers and CCIN), and I realized that our in house programmers had done an
excellent job in building these sites," Mercaldo said.
|
|
" Being involved as a Board member
at Associated Cities allowed me to meet many of the other geo domain owners in
the industry, and many of their sites were not developed. So I packaged
our system, called it “City In The Box”, registered the name CityInTheBox.com, and offered our development platform for
$12,500 per city.
Presently, over 125 City.com’s are running on our system, and 65 of them are
managed by our company, GeoDomain Development Ventures, LLC (dba “CitiesPlanet.com”)." |
Though
his system has been embraced by a long list of well-known clients, the global
economic recession that the U.S. is just now emerging from has not made things
easy for Mercaldo. "These past four years have taken its toll on many businesses in many industries,
and while we have successfully launched all of these sites, the challenge to
monetize them all has been a struggle. We have been extremely blessed
and fortunate to have patient partners and domain owner clients, for without
them CitiesPlanet would not exist. Nat Cohen, David and Michael
Castello, Elliot Silver, Peter Niederman, Hugh Hedley, the team at
California Media, DigiMedia, Toby Hardy, Jessica
Bookstaff, Steven Kasiyev, Alan Hsu, Sam Melamed,
Shai Neubauer, Tom Rask, Richard Lau, Ben Payne and
Todd Little and many other
individuals have supported us through thick and thin, along with our key
personnel, led by Becky Kelly."
FrenchRiviera.com
owner and CitiesPlanet client Toby Hardy (left) with CitiesPlanet
consultant Holly Meschner and founder Fred Mercaldo at the
Carlton Bar in Cannes, France.
With
the economic headwinds finally starting to calm, Mercaldo believes his client's
faith in him and the City in the Box platform will soon be rewarded. "While I have long believed we were
building something special, finally others in the venture capital world
now
believe it too. Understanding that this project is now scalable and a
great business and revenue model, we are close to making an announcement that
will take CitiesPlanet and the geo domain space to the next level,"
Mercaldo said.
"
Presently, we are excited to be bringing in some major partners that should be
able to provide the resources we need to get CitiesPlanet to the levels of
where it needs to be. About a year ago I had realized that this project
was much bigger than our current infrastructure could handle so I interviewed
with three different venture capital companies. In each case, after 2-3
initial meetings, they passed on our deal. My reaction in each case was
“They don’t get it”. But a scary thought hit me after company #3
passed on us - maybe they did get it, and I don’t!,"
Mercaldo recalled.
|
Mercaldo
with new grandson Cannon in 2009 |
" I did not know
what was missing with our offering - 65 markets, hyper-local, pure City.com
brands, a likely takeover someday soon for a major media company, a scalable
model for the software platform - what’s not to like? I felt I’ve
accomplished some of my best work of my entire career during the past 3 years,
only to not be rewarded for our efforts, and in the process letting my friends
and clients down. That all has changed over the past 3 months, as we have
been courted by three separate companies and the one that we have chosen to work
with has some of the most impressive talent and experience and individuals in
the digital space that I have ever met - and they believe CitiesPlanet can be
much bigger than even I ever imagined."
"So
after much hard work and
some highs and lows over the past 36 months there is hope. I look
forward to getting this deal finalized so that we can proceed and also to be
able to announce and share all of the details with you. It will be a very
important development for the City.com space, and the next 36 months should be
special."
|
"We
have long believed that daily print is going away, as it is yesterday’s news,
not green friendly, and no longer a sustainable business model. We are
seeing it every day, and once the major media companies emerge from bankruptcy,
and get their balance sheets in order, they will aggressively go after the top
names in each market to publish their online newspapers and publications.and
there are no better local names than each specific city’s own name, followed
by the .com. We will have a major announcement in the coming quarter, and
I am ecstatic that not only my client’s patience will be rewarded, but also
the City.com space will have a chance to thrive and mature into the brands we
always believed they were destined to become," Mercaldo said.
As
a former President of Associated Cities and the current President of
GeoPublishers.com, Mercaldo also believes that geodomain owners as a
group, will again be looked to as leaders in the domain development
space. With the unraveling of Associated Cities and the low profile of
GeoPublishers since the new group was established two years ago,
geodomains, have been out of the spotlight they occupied before the
recession (the sector's last trade show was the 2011
GeoPublishers.com Expo in Chicago).
"While it is clear the future of City.com’s is extremely bright, the present
state of the economy continues to hamper the performance and financial results
of many City.com brands," Mercaldo noted. " When you think of the overhead needed to operate
a City.com properly, involving a programmer, content, bloggers, salespeople,
accounting, management, hosting and other related expenses - combined with
local businesses just now getting back to having a serious online advertising
budget, it has taken a major toll on operators that were making excellent
profits prior to the recession. I
|
President
Fred Mercaldo
welcomes
attendees to the October
2011
GeoPublishers.com Expo in Chicago. |
| believe we are all united in our
thinking and overall game plans, and most have had the wherewithal to hang in
there and survive until business gets back to normal." |
The
pioneers in the geodomain space are all still active and Mercaldo believes
the best is yet to come from that pool of talent. "Associated Cities
Co-Founder Dan Pulcrano
had a great influence on my career," Mercaldo said. " Dan,
along with the Castello
Brothers, Josh
Metnick, Sean Miller of NYC.com, Skip
Hoagland and others provided early insight on the key qualities needed to
successfully operate a City.com brand, and also the benefits of having a
working Association."
|
|
"Regarding GeoPublishers, we are right in the middle of major improvements and
discussions on moving forward and planning our next Expo. Don Jones and
Bill Hammock of NewOrleans.com have supported this project from Day
One as
they believe, as we all do, that our geo brands need a strong association.
We thought 2012 was not a good time to have another Expo as there were too
many other Expos along with the economy still being strained. I
predict GeoPublishers will thrive and become the type of association our
industry needs, and I am committed to helping in every way I can,"
Mercaldo said. |
While
things appear to be looking up for geodomain owners, there is one ominous
cloud on the horizon - the impending arrival old hundreds of new gTLDs,
including new geo extensions lilke .nyc, .london, .paris and the like. How will
extensions like that will affect the .com brands representing the same
locations?
"Much
has been discussed about this topic, but I remain convinced that they will only
strengthen the pure City.com’s brands," Mercaldo said. "There will be a few exceptions
in a few specific markets, but overall I don’t see them having a major impact
in the geo space. From a geo point of view, .CO, .US, .Travel, .NET and
many other extensions have not thrived, and the public continues to trust
and
believe in pure .com brands, especially City.com’s. The new gTLD’s
will have an impact on generics and other products, but again, in my opinion,
nothing can touch the City.com brand as a resource for everything and anything
happening in a city."
| With the development experience Mercaldo has
acquired across good times and bad, you might wonder if he is applying any
of that to non geo domains as well. "A “wealth of internet knowledge” guarantees that
you are an expert
only until the next Google algorithm change!," Mercaldo
laughed. " Then you are back to square
one! We have dabbled with other non geo sites, achieving a certain level
of success and then have to go back to the drawing board. Honestly, the
City.com space takes up 100% of my time, yet I do own a portfolio
of |
| about 600 generic names that I plan on having some
fun with in a few years."
They say all work and no play makes Jack a dull boy. What about Fred?
"
Golf is pretty much my only activity outside business and family,
"Mercaldo said. " My play
these days is sporadic, with playing in a tournament 3 days in a row, and then
nothing for a month. The past couple of years has limited my time on the
course, raising my handicap from a solid 5 to a horrible 10! I look
forward to the coming years and getting to play more and getting more
competitive." |
|
"We
are fortunate enough to have a second home in Show Low, Arizona - 165 miles
from our home in Grayhawk in North Scottsdale. It is located in a golf
community called Torreon, and the elevation at 6300 feet means that when it is
112 degrees in the summer in Scottsdale, it is 88 in Torreon - so we try to
spend as much of the summer up there as possible. We even like to be
there in the winter - usually a minimum of a long weekend each month, and the
fact that it receives a significant amount of snow reminds me of growing up on
the east coast and good feelings," Mercaldo said.
An
early spring snowfall at Mercaldo's vacation home in Show Low, Arizona.
|
Fred Mercaldo
and wife Jean
with grandson Cannon in 2011. |
Mercaldo would also like to spend more time with his growing
family. " Our two children, Scott (married to Minna and living in the
Bay area) and Kelly (married to Todd and living here in Arizona) are doing just
great, and have given Jean and I four grandchildren - 4, 3, 2, and 4 months old!,"
Mercaldo marveled. "Three boys and a beautiful little girl - Cannon and
Kyndal are here locally,
Dhillon and Grayson are in the Bay area (I remember growing up everybody
was John or Joe or Tom or Mary - those days are obviously gone!"),
Mercaldo smiled.
"Our work
schedule minimizes |
| our time we can spend with them, and we are hoping this will
change soon. Poor Jean - after 30 years at IBM she thought she was done!
Nope - I recruited her to be our accountant, so she is busier than ever these
past three years!" |
Something
tells me the always active Mercaldos wouldn't have it any other way.
It's a good thing too because if a geodomain resurgence follows the
track Mercaldo predicts, they will have more than ever on their plate.
|
