Castello
Cities Internet Network (CCIN) CEO and
President Michael Castello was one of the first
true domain name visionaries. 20 years
ago when only a handful of people even knew what a
domain was, Michael knew what they could be. In
fact, he was so sure they would irrevocably change
the world he started building what became
one of the best portfolios in the domain
industry.
Michael,
both individually and collectively as part of the
legendary Castello Brothers, has had many
triumphs along the way, both in domain investment and
domain development (PalmSprings.com,
Nashville.com
and Daycare.com
being prime examples of the latter). His latest and
one of his greatest successes - being announced in
this story for the first time anywhere - was
the sale of Whisky.com for $3.1 million
in a deal made on New Year's Day (2014). The
blockbuster sale was for the domain name only -
a domain that Michael had registered at the dawn of
domaining - when it cost nothing to register a
domain name!
There is
a remarkable story behind the Whisky.com sale,
a saga that parallels Michael's compelling personal
story recounting the hurdles he had to clear over
the years as he climbed to the industry
|
Michael
Castello
CEO & President,
Castello Cities Internet Network |
The
Making of Whisky - By Michael Castello
Back in late
1994 I had a vision of what a virtual
world could look like with the introduction
of the commercial web to the public. I felt
there would be an exodus of people moving from
the industrial world into the virtual world. A
decade earlier I was using the stage name Michael
Seven. As an accomplished singer/songwriter
I learned much of my trade in New York City and
was taken under the wings by Tin Pan Alley
songwriter great, Lou Stallman. After
some success in New York City, my brother David
and I moved the band to Los Angeles where we
performed in the local music scene playing clubs
such as the Roxy and Whisky a Go Go.
Sometime around
1994 when Los Angeles suffered the Northridge
earthquake I became ill. I
couldn’t figure out what was happening to me.
I was feeling very weak and made the decision to
see a doctor. I wondered if I had valley fever
or chronic fatigue syndrome. The doctor did a
battery of tests and came back with a shocker.
He told me what I had is incurable and
was going to eventually kill me. At the
time I was married to my wife Sheri and
we had a 2 year old son Jonathan. I
wasn’t ready for that kind of |
Michael
Seven (AKA Michael Castello) |
news. My wife made
me the best meals trying to get me healthy. We
were even gluten free back then. No processed
sugars, only healthy eating and juicing. |
After
two years of waking up with the thought of
dying, Sheri convinced me to go to another clinic.
They said they would give me the results after New
Year's whether the tests were positive or negative.
After several weeks, Sheri told me the doctors
normally don’t do this but since it was Christmas,
they wanted me to know that I did not have a
terminal illness. In fact, I didn’t have anything
wrong with me. “Nothing!?!” I remember
putting my face in my hands. I couldn’t believe it.
During those two years of struggle I spent a lot of
time on the computer and I made some of the best
decisions of my life. It was 1994. I still
didn’t exactly know how to get a website online but
I knew I needed to. I had so much to learn about this
Information Super-Highway. The name of my production
company at the time was Powwow Productions. I
wanted my musical website to be called Powwow.com
so I went about trying to figure out how to get that
name. I eventually registered Powwow.com after many
months of trial and error. Most domain names were
available like Hollywood.com or 777.com.
Why would I need those, I thought? After a few months
I again checked the whois for Hollywood.com and
realized it and many others had been registered in the
previous weeks. It hit me like a freight train
that there were others grabbing these domain
names.
Michael
& Sheri Castello on the Sunset Strip |
I decided to
register more, one being Whisky.com. I
had the original registration in March of 1995,
and I registered it for free. I always
liked Scotch whisky, but the real reason I
registered Whisky.com was because of the Whisky
a Go Go night club in Hollywood. I always
enjoyed “The Whisky”, with its musical
heritage and scene where the likes of The
Doors and Janis Joplin played. Years
later, I even offered Whisky.com to the
owner’s son and he told me he didn’t need
it since they already registered WhiskyaGoGo.com.
That rejection would prove to be good for me.
Back in 1995/96 the internet was viewed as a
fad. No one really took it as being anything
other than a digital rolodex. Around
1996-97 Network Solutions started
retroactively charging anyone with a
.com/.net/.org a hundred dollars for two
years per domain name registration. I really did
not have that kind of |
money back then, and
after all, the names were free to register
previously. I needed money to keep the names
that I had registered for free, but now would
cost me more then I had. |
I
received an email one day in 1996 from someone in
Germany. A professor wanted to purchase Whisky.com. I
thought I could possibly make some money and I offered
him the name for $1,000. He told me he could
register any domain name for $100 and declined
my offer. I told him that $100 was no incentive
for me to sell. Funny thing, he wrote me the
very next year and offered me the $1,000. I told him
what was $1,000 last year was now $10,000. He
scoffed and said that was preposterous. Lo and behold,
a year later he again came back with an offer of
$10,000 and again I told him what was $10,000 last
year is $100,000 this year. I never heard from
him again.
The
Maturing of Whisky.com
Over the next several
years I created a website for Whisky.com. It was a
pretty expansive site at the time since I created a
page for every brand of whisky – and there were hundreds.
The site took on a life of its own, ranking at the top
of search for just about every type of whisky. There
were several large conventions, like WhiskyFest
and WhiskyLive, and I decided to make some
Whisky.com business cards and attend a few
events.
I started
out walking around the distillery display tables where
you could sample great whisky. I walked up to the
table to tell them that I was the owner of
Whisky.com and handed them a Whisky.com business
card. I told them I would like to have a picture for
the website. They would all stop what they were
doing and have me come behind their booth to take
pictures with me while everyone else out in front
of the table asked who I was. It seemed Whisky.com was
a big hit and everyone
|
Michael
Castello at one of the many whisky connoisseurs
conventions he attended to learn more about the
industry. |
gave me their full
attention. I realized this is what happens with
a Hyper Domain Name like Whisky.com. There
is already a built in trust factor, and
it greets you like a Lamborghini in the fast
lane. |
The
Sale of Whisky.com
Toofun
of TorontoDomainer.com holds the $310,000
Castello Brothers check he received for brokering
the $3.1 million sale of Whisky.com.
It took just seven days from the time the
name was listed to find a buyer. |
I was doing business in Toronto
in 2013 and while on the jet I remembered a domain blog named Toronto
Domainer. I wrote a post on this blog telling the
author, Toofun, that I would be in his neck of the woods
and asked if he would like to join me for a few drinks to talk
domain names. Toofun wrote back that he would. At the time, he
was dealing in three to four figure domain name sales, and he
was also a camera operator for several major films in Toronto.
He told an incredible story
of his family fleeing the Iranian Revolution, explaining
how his mother and siblings went from country to country trying
to survive, hoping eventually to reach the USA. He
mentioned how he would love to come to California; I told
him to book a flight and I would introduce him to the area and
some of my friends. He took me up on my offer, finally settling
in Los Angeles and eventually getting his green card! |
I remember him sitting across from me one morning, at the local
coffee shop on the beach. He said, “I would like a chance
to sell one of your premium domain names”. I thought about it
for a second and said I would let him sell Whisky.com – but
I wanted 3 to 5
million dollars for it. He said he would get
right on it. I believe that, in life, the things
that you want, you have to ask for, and I
appreciated that moment. |
Toofun
immediately started contacting companies, and
within a day he had two offers for the “domain
name only”: one offer for $200,000, and
another for £1,000,000. I was very |
|
impressed, but
I told him that he needed to get more for the
name. At the time, I had another inside
contact at a major whisky distillery that was
pushing his company to make me a $3 million
offer and I told Toofun about it. The next day,
Toofun told me of a new $2 million offer
from Whisky.de,
and I knew that one was going to be a solid end
user – but I still needed more. I knew that
I was asking Toofun to turn down a lot of money in
commission, but I told him he needed to put that
aside and understand there was no difference
between $10,000 and $10,000,000. It’s just a
number. He said that he understood, and he had
learned that in his acting class and would use
that mindset going forward.
Toofun told the buyer
that we needed more than $3 million, and
that there was another potential buyer at the same
price. The buyer than came back with an offer at $3.1
million! That was a perfectly fair deal for
me, and it was $100,000 more than the Vodka.com
deal of 2006. I told Toofun to close the deal, but
the buyer required an indefinite NDA
(Non-Disclosure Agreement) on the transaction.
There was no way I would accept a permanent
NDA. These days, there are a lot of great .com
deals that no one knows about, and this deal
was going to be different. I told the buyer
that, if there was an NDA, then there was no
deal. I was willing to let the $3.1 million
go. He offered that his countrymen wouldn’t like
the fact that they were spending this kind of
money, and I told |
him that a name like
Whisky.com not only made his market local, but global.
The buyer eventually agreed to a two month NDA.
Our lawyers drew up contracts, and the money was
wired on January 2nd, 2014. |
Escrow.com
screen shot showing the final details of the Whisky.com
sale at $3.1 million.
The
deal ran smoothly. I, as the seller, felt the name was
worth more, and the buyer felt the name was also worth
more. As I told the buyer, the right person bought
it at the right time. Whisky.com is now owned by the
largest supplier of whisky in Europe, and I
believe that with this name, they will soon be the
largest supplier of whisky in the world. I
believe the English language is the language of
commerce. We use words to command our computers,
phones, and televisions. To own a word that can
command a thought, product, or service, is tangible
and invaluable. You have your own distribution
network that is pre-branded. That saves global
businesses millions of dollars in marketing.
I
want this story to be told because it is a great
“rags to riches” story. It is an adventure
that will only get better as we transition from an
industrial economy to a name economy. Toofun
made a $310,000 commission from just one sale.
He went from selling four-figure names to seven-figure
names in only seven days. It still amazes me
how much power and leverage these names command!
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