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Very few people in
the domain investment world have been it as long (and
as successfully) as Michael Castello has. His
track record stretches back 25 years to the mid
90s and the many home runs he has hit along the way
have been well chronicled, including in our 2006
Cover Story profiling Michael, his brother
David and the geodomain empire they built at Castello
Cities Internet Network, as well as a 2014
Cover Story detailing the amazing history behind
Michael's $3.1
million sale of Whisky.com.
Now we can unveil, for
the first time, another chapter in the Castello saga -
this one centered on a $1.5 million deal
Michael has just made to send Room.com to the
owners of GetRoom.com,
a well established corporation that helps companies find
innovative ways to increase their available workspace.
Room.com will give them the kind of unforgettable
one-word .com brand that so many growing companies are
looking for today.
As with Whisky.com, there
is a fascinating back story to the Room.com
sale. While the domain is being paid for over 60
months Michael will be splitting that healthy annual income
50/50 with nationally known, award winning
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Michael
Castello
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radio
DJ, Walt
"Baby" Love. Yes, as much as has
been written about Michael there are still stories you
haven't heard, including this one about how the long
time friends came to be investment partners in a
select group of generic .com domains over two decades
ago.
Michael
explained how he and Walt
first met. "In 1991 I was pioneering direct
access audio technology," Michael recalled.
"I had bought a digital recording system
that I put together with Spectral Synthesis
that could record 16 digital tracks. It cost me $100,000
for the system, but I was doing things with recordings
that no one else was at the time. The
technology took music from tape and vinyl to digital
files - the types of systems everyone uses today - and
it was a great time to experiment."
Michael
Castello at The Roxy in Los Angeles (circa 1992) where Mix
Magazine was covering new technology
he was utilizing for live recording at the
famous night club, as well as at the Whisky A Go Go.
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"I had a
friend who was an executive at Tin Pan
Alley Records who knew a radio personality
named Walt "Baby" Love at Westwood
One (they were mass media giants in
radio)," Michael said. "He wanted to introduce Walt to me and
my new studio. Walt is one of the radio
greats in syndicated R&B radio, and he
was also a writer for R&B Magazine
with Robert Kardashian."
"Walt had
the long-running R&B radio program The
Countdown, and was starting a new
gospel radio show called Gospel Traxx
(a show that wound up being carried by 132
radio stations across the U.S. and 15
more overseas). My computerized studio, Powwow Productions,
was set up in a room of my apartment in Playa
del Rey, California. I also happened to have
a beautiful view of the wetlands
and the ICANN twin towers in Marina del
Rey," Michael recalled - an
interesting foreshadowing of the domain career
that was still ahead of him. |
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"When
Walt came into studio room he asked, "where is
the studio?" I showed him the computers and
digital converters, and he looked puzzled. I asked him
to sit down, placed a microphone in front of him, and
asked him to read something. I switched on the
computer and started recording. He began reading with
his golden voice, and after making a mistake he
stopped and asked if he could start over. I told him
to just continue reading and correct as he read along.
When he finished, I quickly edited his mistakes out
and played him back a flawless performance."
"He didn't
understand what had just happened! In those days, a
recording artist would have to wait for the tape
recorder to stop, rewind, and re-record. I cut that
process out completely and made recording a lot
easier. He took a moment, then told me he needed to do
his new Gospel Traxx show at my studio. That
started a friendship that continues to this day, 16
years and 600 shows later. Walter was smart enough
to know when a new technology was going to be a huge
benefit."
Walt
"Baby" Love in the studio.
While Michael's audio technology was on the cutting
edge of that era, domain names were
still so new almost no one had taken notice of
their commercial potential, other than Castello and a handful
of similar pioneers. "From 1995 to 1997, Walt
watched me register domain names," Michael
said. "We spoke about it, but I don’t think he
understood the nature and future of the internet. When
I made my first sale, letting Powwow.com go to
VOIP operator Tribal Voice for $25,000,
Walt asked if he could get involved. I registered
names for him in early 1997 that he paid for, and we
split ownership 50/50."
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Image
friom Bigstock |
"We got
generics like Room.com, Wash.com,
LYL.com, Racer.com and Mouth.com.
There really was no risk at the time. When Network
Solutions started to retroactively
charge $100 for names that were
previously free, many owners of domain names
decided not to pay out of protest. I waited
for the drops that summer. I was aware there
was a seven-day buffer for submitted
registrations. As an example -- if the drop
date would be June the 14th, I would submit
registrations for that name, every hour on
every day, starting on the 7th. When the drop
date hit, my registrations were already
waiting in line," Michael said. |
To
get the kind of paydays Castello did with Whisky.com,
Room.com and many others, you have to be patient
and have a strong enough belief in the value of
a great domain name to say no even though someone is waving
tens or even hundreds of thousands of
dollars in your face. That is not easy to do when
you never know when or if a better offer will come
along. Michael said, "Walt has been patient, and
I had turned down many six figure offers, but
I valued the name in the seven figures for some time.
With any generic, there is the easy money and then
there is the big money. You must have patience
for the big payday. Walt trusted me over the years to
do that."
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Their
patience paid off as the right end user,
GetRoom.com, finally arrived. Michael told us
how the deal came together. "Mark
Daniel from Domain
Holdings contacted me last year.
He had a potential buyer, but the offer
wasn’t in the right price range. Still, Mark
stayed in constant contact with me and was great
at getting the deal done. It’s a process
in which you have to feel out the situation.
In the last two months, the contract and sale
came together rather flawlessly."
"It
can be difficult sometimes. dealing with a
middleman, but Mark was instrumental in
the success of the deal and has the experience
to know what needs to be achieved to get the
job done. He worked hard getting the buyer to
understand why these names are so
highly valued and what a brand like Room.com
would do for their company and future,"
Michael said. |
Mark
Daniel |
"These generic domain names are somewhat like
your children," Michael added. "I am
always looking for a way to hold on to them. You work
with them over a long period of time with a vision.
Then, you realize it’s the right time to let them go
with the right future in front of them and the wind at
their back. I am thrilled with how Room.com will be
used.
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While
Michael has had many huge sales to celebrate this is
the first big one that Walt co-owned. It was a
thrilling new feather in the cap of a man
of many talents. In addition to being one
of the nation's best broadcasters, Walt is
a former paratrooper who
served two tours of duty with the 82nd
Airborne in Viet Nam. We asked
Michael how his friend reacted when he got the good
news about Room.com.
"Walt is also a pastor
who serves as
the Minister of Entertainment at First AME Church
in Los Angeles," Michael noted. "His
response was “Praise God!”
You would expect nothing less from Love, who,
in 2007, also published a book -
Michael and
Walt's Room.com deal comes on the heels of the biggest all
cash domain sale ever reported, Voice.com
at $30 million in June.
That was more than double the amount paid
for the previous record holder and while many
were surprised by that, Michael was not among |
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them.
"I’d gotten a lot of flak for suggesting
that my portfolio was worth $1.2 billion
back in 2014. Michael
Berkens had calculated that the
forty names I was selling at the time would have
to be worth $30 million each to
reach that number," Michael recalled.
"I
am a firm believer in domain names and their
relevance for the future. These types of generic
domain names are rare and worth a lot. Those
potential buyers that have an understanding and belief
in their need, at some point will pay whatever is
needed to attain them. I think there will be more
of these types of sales in the future."
History
does suggest that the sky is indeed the limit. In the mid 1990s a lot of people were
telling Castello and the other pioneers they were crazy
to pay $100 for a domain name. Since then we have seen
many of those $100 (or less) purchases sold for millions
of dollars, so who really knows how high the
ceiling will be for great one-word .com domain names? |
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