Unlocking the True Value of a Category Defining Domain Name with a Custom Formula

Morning Folks!!

When I approach a business I approach it in a deliberate manner and long term. I know the difference between urgent and who gives a shit. Prioritizing may be my single greatest strength. I know what has to be done first, second and third and by then usually the other things just fall into place or there is more than enough time to address them.

I have watched many a company come and go because either the timing was wrong or the formula was wrong. My companies have many things going for them whenever I start one. Most importantly, I am not dependant on the entity to eat and survive. That allows me the luxury of taking my time and playing a different type game.

The audience I am targeting may be the single smallest group in domaining and thus in any other sector of business of any industry in the world. But that small group understand what they own and the potential they have when matched with the best partner. They have patiently kept their portfolios in tact waiting for the future. My vision MAY be their vision and I am banking on it that it is.

Unlike a broker or others, I could care less if a deal is made. I only want to attract the smallest of audiences. The ONE person or business uniquely qualified to pull something off that is very big. I don't waste my time or the time of others with undervalued offers or folks that don't see what I see.

Now I am not dissing brokers. I am showing the difference in mindset in this particular game. I would be dissing myself if I was. Selling a domain via a broker and turning it into cash is a great thing. What we are trying to do and JointVentures.com is instead of the immediate cash, which some may need, we are looking for long term revenue streams. Long term upsides. Long term participation in the assets WE DISCOVERED and are somewhat attached to. We want to share in what we initially saw and THAT is the difference and where I come into the equation.

I have never made public all the moving parts in the candy.com deal. 1 part cash, 1 part finance, 1 part interest, 1 part royalty of 2%. I tried like hell to get 10% of the company through the entire negotiations. I was able to get nothing in the initial deal. But in the years that have past I have been able to acquire 7.5% of the entire company. I also just exercized an option in December for an additional 2.5%. So I got 10% AND 2% royalty.

But here is a part I don't think I have ever made public. If candy.com were to sell at some point, I get to share on the upside of that sale to the tune of 20%. Total payouts in 2012 will be $250k. That is before we get to my 7.5%.

Yup, Could have sold it for $500,000-$1,00,000 when I got it. But I look at the world differenty. My mission is to build LARGE revenue streams that last a lifetime. Being patient for a return 10x-100x or more.

Meanwhile I see folks sell their assets much below what some domains are actually worth. I measure domains in a way my target group does. As a unique piece of a very important puzzle that has the ability to unlock millions of dollars in added sales and to hurt your competition while doing it. IF you have category defining names. Basically one and 2 word domains that define a category or product or service as I have defined over the past 30 days right here on this blog.

Property.com deal was largely based on the Candy.com deal. It took nearly 2 years to make that deal a reality. Some of the 'Moving Parts' are different but the starting point was the same. These deals take months and sometimes years to negotiate. Especially ground breaking deals with formulas that are much more intense than selling a domain for less than the real future value of the asset. Punchbowl.com and Luv.com also come with future upsides.

These deals only work on certain domains that I have defined over the past weeks. And of course it is not an easy process. But it is getting easier with each passing day and the coming rise and fall of .whatever will seal the deal for leasing great .com domain names.

Not all deals can get done like this. But each case requires a custom formula that incorporates the things most important to buyer and seller. I am a 'Chemist' when it comes to these formulas because they are always multi-dimensional. But finding the right partner, with the right mindest, with the passion and energy to do something BIG is really the game. Really the big hurdle. But they are always out there. Their ideas bigger than their wallets and are willing to share the prize to get their shot at reaching the stars. It's much more than selling a domain name. It's getting your shot to hit the big time.

I simply realized that I could be one of those moving parts if I can bring to worlds together and hammer out a deal not only agreeable to each but each party walking away excited and satisfied because a seed of the future has been planed and the chances for germination are quite high. Many of you have much better domains than I have. I'll be blunt, I want to share in your income of that domain for the rest of my life. I am willing to invest my TIME to that end. Simple. I see that big an updside by bringing those two wrold's together.

At the end of the day my job is to transform a category defining domain name from making $10/day to making $100/day, $1000/day and being part of a blossoming business and not just the ower of the domain name. This is not small ball looking for 10% or 20% increases. This is about transforming your domains, ONE BY ONE, into long term leases, businesses, joint ventures and other options I am able to negotiate on your behalf with you setting the boundaries. I just need you free listing and you don't have to do a single thing different with your domain name. Just wait for an email from me.

So 2013 marks the start of a long journey that will change how many of us do business in the future. I wish it was a formula that would work universally. It can only work for certain domains. So instead of trying to sell a valuable domain to domainers, transform it into an annuity. Into a long term or even permanent income producing asset. I can only use the best domains out there to do this. The more category defining, the more leverage.

The future is not about chasing the past but being way early for a future present. Plan for a future day and be there before others know that they too will be there. Not rocket science. Just a shortcut to the future. I am uniquely qualified to pull this off because to me it is simply repeating what I have done except with even better domains than mine and the patience and passion to negotiate like it was my own.

I am fishing for big game. It means we go home empty handed MOST of the time. But when we return with that BIG ONE......the whole town turns out and a new day dawns.

Have a GREAT day!

Rick Schwartz

12 thoughts on “Unlocking the True Value of a Category Defining Domain Name with a Custom Formula

  1. Krishna

    Another good article. Money is not an issue here. Unlike stock market and property market, businesses owners do not have formula to understand the domain value. Once they got idea, domain valuations may reach new highs.
    But, some brokers are trying their best to commoditize the domain market while some domain bloggers are trying their best to promote .whatever shit.
    When Facebook came, some idiots said”we don’t need domains and own websites”
    When applications came, some idiots said”we don’t need domains”
    When .co came, some idiots said”.com is dead”
    In this kind of environment, you are trying to increase the value of domains and change the domain business forever.
    Best of luck to You and Danny.

  2. Uzoma

    Great motivational write-up.
    Only one thing keeps making me scratch my head: the domains you accepted on your list to me, over 96% of them do not fit what I see that you see.
    Don’t get mad about this, I am simply pointing this out because, you’ve got game in this venture, but the domains that were presented on the list, not your own domains, but the submitted, and admitted names posted last week, are not commensurate with the foregoing description in your thesis. Again, like I did prior to the last Traffic Auction, I will urge you to purge the list, and use pure category killers that would fetch the type of revenues, and yield the dreams presented.

  3. Rick Schwartz

    It takes time to gather 300 rings.com quality domains.
    What I see is SALES.
    I look for domains that can increase sales for an end user.
    That meets many other factors and our list is not perfect.
    I can’t tell you all the specifics I look for. But they all meet a certain standard.
    Can they be promotional? Can they be shocking? Could they live on a billboard? etc.
    Each one is researched the way Danny and I research it.
    Most won’t agree with our picks and that is okay. We are the ones that own the burden.;-)

  4. Guy

    great writeup Rick
    hope everyone realises the importance and potential value of a ‘Category Defining .com’
    that is the key term.
    all people need to do is buy ‘her ‘ from me lol

  5. Jeff Schneider

    Hello Rick,
    Thank you for revealing the answer to one of my previous questions. You are quite simply a Master negotiating closer. I see what you see and my mind and yours parallel one another to a point. Where I get fuzzy about the structure of a deal yours gets clearer.
    I never work hard , just smart. I agree with you Passive residual Income with bonus kickers contained in Candy.com structure are where we all want to be. This Master Mind Blog has laid the groundwork for my future success. Thanks for sharing some secret negotiating techniques you employ, I am sure there are others who will benefit as well.
    I realize the nuances and techniques of shaping a deal require a certain mind frame for it to successfully role out, for there are many twists and turns in the process that have the potential to blow the deal up. Most everybody including myself, needs your master ability at the negotiating table for these deals to emerge. Others may think they can do it themselves I know better.
    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  6. CateTV

    I so love reading your insights Rick! Earlier this week we met with our financial adviser. We have a couple of annuities and we discussed with him how wouldn’t it be great if we were able to turn some of our media”assets” in to some kind of annuity ! He told me that they were”liabilities” as they are now. Thanks for sharing mutual glasses of your viision once again Rick. Patient Prioritizing is a skill that takes practice – thanks for leading the way.

  7. Patrick Hipskind

    Hi Rick,
    I would like to describe the summit I see a top the Enterprise Cloud Computing industry with the hope that some business leaders will be compelled to adopt the business model you are advocating for the domain name industry. During the past two years Citrix bought the start-up Cloud.com for an estimated $250 million and Apple Computer purchased the iCloud.com domain name for $4.5 million. Domain names of this quality are typically out of reach for most start-ups if they have to pay cash up front for the domain name, but the value an industry defining domain name can add to the balance sheet is immense.
    The independent research firm Forrester estimates that the Cloud Computing industry will grow to $241 billion annually by 2020. Within the Cloud Computing industry there are different segments that include PaaS (platform as a service), SaaS (software as a service), private clouds, public clouds, hybrid clouds, cloud storage, cloud hosting, cloud sharing, and cloud streaming. Domain names that define these segments, also known as generic or category defining domain names, can be of immense value to a company in terms of consumer brand recognition, search engine optimization, and the monetary value they add to the balance sheet as intangible fixed assets. A generic or category defining domain name may allow a company to increase sales, the price per item sold, and even lower the risk associated with a new product or service introduction.
    Unlike a cutely worded made up domain name, a generic or industry defining domain name has an inherent monetary value. Its monetary value can be assessed based upon several factors, some of which include: number of global searches per month, number of search engine results, and market size. A generic or industry defining domain name may be appraised for inclusion on the balance sheet as an intangible fixed asset using the income approach or market approach. The value added to the balance sheet can help a firm meet the listing requirements for the NASDAQ capital market, can help secure the next needed round of venture capital financing, and can improve shareholder value thereby increasing market capitalization.
    At the summit of the Enterprise Cloud Computing industry, I see a high growth tech firm fully leveraging the domain names eCloudSharing.com, eCloudStreaming.com, eCloudSaaS.com, eCloudPlatform.com, and PrivateECloud.com to become a global leader providing Enterprise Cloud Computing products and services. Such a company will not be built for long-term sustainability by using cutely worded made up domain names, but will instead leverage all of the value that a generic and category defining domain name can provide.

  8. UFO

    That all sounds fine, but you are talking about a specialist service and as such branding isn’t quite as useful. Quality, Service and industry recognition for a good price is what gets the deals. Hence, names like Rackspace and all the rest all hold water all those segments you describe are just various product offerings from the same data centres. All this ‘Cloud’ is just BS wordology for ‘DataCenter’ ‘colocation’ etc.
    At the lower level of the more unsophisticated buyer then having a more aligned name would help but I’d say they wouldn’t even search for the terms because they wouldn’t know what they mean, they’d tend to rely on industry mags and refs and hearsay which would point them to a supplier of bandwidth. Unsophisticated people rarely change providers that’s why they are quite valuable propositions because people don’t migrate away often.
    icloud had a massive value for apple because it fits their whole marketing and branding strategy. It sounds a cool word for the more mundane datacenter.

  9. Patrick Hipskind

    In most cases, the buyers of these technologies are not unsophisticated – they are enterprises. They are the IT experts within those enterprises.
    Although the industry is still in the beginning of its life cycle, exact keyword searches show demand for products and services in the segments I listed. Cloud Sharing receives 720 exact global searches a month, cloud streaming receives 480 exact global searches a month, and cloud computing saas receives 590 exact global searches a month on the Google search engine.
    Providing a medium to large size business with its IT infrastructure is big business, and it is moving to the Cloud. A $241 billion annual market by 2020 is a large market, and these are large ticket items within this market. As a corporate executive, I would want to use a generic or category defining domain name to reach this market on the Internet and the .com version of the domain name.

  10. Jeff Schneider

    Hello Patrick,
    Your comments on the Cloud Industry are are Hard Asset backed. Our Web Site or Foundation is tied directly to the coat tails of the Cloud Industry. We think our Multidimensional Brand will unlock the awsome potential of this nascent Industry. Our virtual Business Foundation will be the key to unlocking Cloud computing on a Global Mass Marketing Scale. Our future partners are aligning themselves as we speak.
    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  11. Patrick Hipskind

    Hi Jeff,
    It’s an exciting time for IT. Companies are realizing that they must adopt Cloud technologies to lower costs, efficiently scale operations, and remain competitive.

  12. Jeff schneider

    Hello again Patrick,
    It is an equally exciting time for new businesses launching in the Cloud era. any new IPOs or industry leaders in the cloud arena will be advanced and supported by mountains of cash. These companies emerging will be supported by strong fundamentals compared to the Social sites poor fundamental backing of the past few years.
    Our prediction is the Cloud Industry will create the fastest Capital structure Boom in history. The Big Players have been biting.
    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.