Rick Schwartz

5 With… Rick Schwartz, CEO, T.R.A.F.F.I.C.

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rick-schwartz.jpgRick Schwartz is a visionary in the domain investment business. From the mid-90’s when he was registering premium generic domain names to more recently with speculative .mobi names, Rick has been at the forefront of the domain industry, taking risks that almost always seem to pay off. In an industry where many of the top professionals remain secretive (less so now than before), Rick  has been  one of the few people willing to speak out. Because of his outspoken nature, Rick is a frequent target of naysayers, but he continues to dedicate countless hours to advance the domain industry.

Rick Schwartz, aka “Domain King” and “Webfather”, is the CEO, President and Cofounder of T.R.A.F.F.I.C., the premiere domain conference for the domain industry. It is both the oldest and largest and attracts over 500 of the top professionals in the industry in a by invitation only event. With 9 shows in just 3 years TRAFFIC has established itself as the epicenter of the entire domain industry. It has attracted speakers from Ben Stein to Steve Forbes.

As one of the early domain pioneers dating back to 1995, Rick has a knack for predicting big trends and getting it right. He may have been the first to recognize the value of “Type in” traffic which is now commonly referred to as “Direct navigation” – the most potent and targeted traffic on the net. Rick has a prime portfolio of one and two word domains, and is considered by many to be among the leading experts on domain names, traffic, website flow and valuation.

Besides eRealEstate.com and domains like Candy.com, Property.com, Properties.com, Tradeshows.com, Widgets.com and some 5000 others, Rick is also a founding member and sits on the board of the ICA. (Internet Commerce Association) a non -profit organization which is actively looking after and protecting the rights of domain owners..

Rick sold Men.com for $1.3 million in cash deal that was finalized in May 2004, a domain name that he bought for $15,000 in 1997. Many attribute that sale to jump starting the domain space at a time considered the lowest point the domain business has seen. It also cemented his main theory that “Domains would go up faster in value than any commodity or asset ever known to mankind.” Laughed at in 1995 and 1996 it is FACT today. No stock, no land, no gold, no jewel has ever gone up faster and further in value.

1.) EJS: Development seems to be one of the “hot topics” at recent TRAFFIC conferences, and you’ve indicated that you will be developing some of your domain names. What names in your portfolio are at the top of the line for development, and what type of development options are you considering?

RS: “I think Property.com, Candy.com and Widgets.com are the ones that are ripest for development. I have been in discussions with companies on two of these domains. However nothing concrete at this point. Like most things, it all is about the timing. iReport.com is also high on my list. I have experimented with other development. RumorMill.com for one. But development does not automatically mean more revenue. RumorMill.com will likely morph into another type site and be a PPC page during the transition. What most people don’t realize is I had developed sites in 1996 and 1997 when I still had my real world businesses. I have also developed sites that just stay in orbit and I even forget I have them.. eRealestate.com was one of my early sites and I have left much of that largely as a time capsule with only some obvious updates. But most of what was written there came from 1996-1999. I have about 10 other developed sites that I don’t talk much about. As the net matures, matching a great domain name with a profitable formula for development will become easier

Which is why parking pages are so popular. You may collect a little less but you tied up zero time and that alone has value. So every time you discuss development, it circles back to 100% automation. Parking = 0 minutes per month. Development = much more time per month. Eventually there will be some other options as businesses realize just how potent type in traffic is. No matter how you cut it and how well folks think they are doing the fact is the traffic domains produce is worth 10x the current payout rate and sometimes much much more. When the true value of traffic is fully exploited then you will see payouts explode. 2 cent visitors will be worth $20 or $200 or more. What kind of an increase is that? What does that do to the price of domain names with targeted type in traffic? And as parking pages get more sophisticated they will begin to capture data and email addresses and do mail outs and do other things to aid in developing databases of buyers. So development may not be what we expect it to be and it sure as hell is not easy to develop AND be profitable. But like solving the Rubix Cube….we keep trying.. And when folks laugh at those payouts above, they will just show their lack of vision. If I have somebody looking for a $1 million property and I hand delver them to the agent that could make a $60,000 commission, you going to tell me that is worth 2 CENTS?? 2 DOLLARS. $200?? BS! I would rather sell him a 25 cent piece of candy for that 2 cents or just give the visitor to charity. But when the DAY comes that the Realtor says you can make me $60k and I can pay you THOUSANDS for that lead….THEN you will see what a visitor is REALLY worth.. And if a domain can produce just 10 of those people a year, what is the value of that domain? We will laugh when we look back at this period of pennies. Wait until they actually figure it out. How can I be so sure? 2+2 =4. Just because we are in a time in which they have not figured out that 2+2 =4 does not mean WE have to change anything. 2=2 IS 4 and when they figure it out our job is to just be there waiting and the key ingredient is patience. So overpaying for a domain today is still a HUGE bargain when you look down the road and see what I believe will unfold.”

2.) EJS: You paid a record sum of $200,000 for Flowers.mobi, yet the website isn’t mobile-compatible. What are your plans for that domain name?

“Like other investments including dotcom, you have to overpay today to have a bargain tomorrow. I repeat that often because that is one of the foundations of my approach to business. While others are so focused on a bargain, they miss the prize.

.mobi is not relevant today so no need to waste time, money and energy developing. I think .mobi is a play for 3-5 years down the road. It will either hit big or won’t hit at all. That is what speculation is all about. Those that laugh at .mobi remind me of the folks that called me a fool when I bought domains in 1996 and 1997 and paid $100 to register each one. Nobody can definitely predict the future. But you take a calculated risk that may or may not payoff. It’s a risk. You don’t like risk, then put your $$$ in a savings account and make 5%. No risk, but you will watch your buying power shrink away. Some risks pay off. Some don’t. You always have to be prepared to lose your investment if you expect a big payday sometime down the road. It’s about diversification as well. .mobi is a spin of the roulette wheel. Nothing more, nothing less. I have had damn good luck at roulette. If you come to Las Vegas TRAFFIC I’ll show you how you “Hit them hard and hit them fast” and walk away a winner more often than not. I would just rather gamble on domains than roulette.”

3.) EJS: The Dallas Cowboys own DallasCowboys.com, and were nearly the owners of Cowboys.com for a price of $275,000 after the TRAFFIC live auction. The name eventually sold for over $370,000 in the silent auction. What made this name more enticing to purchase during the silent auction than during the live auction when only a single bid was placed?

RS: “I think domainers were apprehensive of the Dallas football team coming after them. There is a history of corporate lawyers that target domain owners and try and reverse hijack generic domain names whether they have any true right to them or not. When the team willingly backed out of their contact at the auction it left the door wide open for that not to happen. Further, the Dallas Cowboys came out so publicly that they were the :DALLAS Cowboys and not the “Cowboys” that gave domainers the confidence to obtain the domain and complete the transaction without fear of repercussions. I don’t speak for the group. They may each have their own takes. This is just how I saw it. Should they ever decide to come after us, I think it would be the perfect case for the public to see. We could even lose the domain when you consider the inconsistency of past rulings. However someone else would lose much more. America’s team would risk that title. Cowboys.com is a generic name. We can keep it an apparel site. We can morph it into a dating site. We can sell saddles if we want. Yes, there would be ways to sell things related to the Dallas Cowboys football team. Probably in excess of 7 or 8 figures a year. But the way the Internet is set up, it does not follow real world rules. So opportunities like that can not be realized without a formal licensing agreement. Being #1 is a great thing. There are only 2 things that can keep you #1. Winning and more sales. We can’t help the Dallas Cowboys win more games, but we sure as hell could add more sales to things they might sell in their stores.

Again, I am speaking from my own personal thoughts and this is not related to the official positions of Cowboys.com LLC in which I am just 1 of 18 or 20.”

4.) EJS: You take a lot of heat from other people in the domain space for nearly every public action you do. What motivates you to continue to be a public figure in the domain business, when you could easily sell out, retire and live a relaxed and quiet life?

RS: “You can’t please everybody. I feel like Joe Torre sometimes. You have one victory after another, year after year and they still want to throw your ass out to the curb. It’s just a human nature thing. So you just do what you think is right and make the best decisions you can by conferring with a large cross section of people and companies and listen to what they say and try and find the direction that moves us all forward.

The best way to take the heat and dispel the nonsense you hear on the boards is having a great success followed by a great success followed by other great successes. At some point when you have a long string of successes over several decades dating back to the 70’s, you can no longer just point to luck. Luck sure helps but it just might also be by design. It just might be having a different formula and vision. It just might be marching to the beat of a different drummer. It just might be that you are so devoted and so dedicated that failure is not an option even though I have no fear of failure. Failure is just a clue in having a great success. (My entire last blog was about failure)

I love this industry. The potential is stronger than anything I have seen in my lifetime. It needs to be exploited and publicized because keeping the industry a secret helps only a few. I have a mission. In a few years I will ride into the sunset knowing I had a major impact in lives of many. That’s a pretty cool feeling. It’s all on record and I will let history and fair minded people sort it all out. We are on an historical mission. It will be written about in history books as we were taught about the gold rush and other epic events. We will all be dead when that happens, but it does not diminish the reality and our place in history.”

5.) EJS: If for some crazy reason some world Internet body ruled that each person was only permitted to own one domain name and you were forced to sell all but one, which would you keep, what would you do with it, and why did you choose that one?

RS: “It is possible extreme actions like this that should have every domain owner supporting the ICA. Believe me, many would like to do exactly that. The ones that blew it and missed the greatest opportunity in their lifetimes will spend YEARS figuring out ways to get our assets. It is cheaper to chip away at our rights with tiny and hidden legislation than to actually pay fair market value of our assets I am going to fight them so I never am forced to answer that question. It will take every domain owner fighting those organizations and lobbyists that will try and re-write law and capitalism in an effort to take title to what we discovered and own. What we took great risks in obtaining. Then we need to publicize exactly which companies are engaged in this type activity and expose them. Some companies may actually be in our space.”

***Bonus Questions!!

6.) EJS: Have you ever regretted selling (or buying) a domain name? If so, which and why?

RS: “Never regretted buying a domain name, but it is hard to part with any. Guess that is why I have only sold about 6 even though I get thousands of offers annually. There will always be an invisible link that is hard to explain once a domain has been in your possession. I think you follow it like a teacher would follow the career of a student. You know you played some small part in their evolution and destiny.”

7.) EJS: The domain business can be a 24/7 operation and can certainly take a toll on your health, family life and social life among other things. How do you escape from the domain world to relax, recover and re-energize?

RS: “First of all it is a hobby and it is fun and I love the daily challenge as well as seeing the future from the front row. So it is hard to escape something you love and look forward to every day when you wake up. I just basically do it in different places at different times and that way my life comes first without forsaking the business or family. So the freedom to be writing this on a 3lb Sony with a wireless connection from wherever I happen to be allows me to re-energize on a continuous basis. Then God created the iPhone and it brought it all together. Now I understand why there are 60 second traffic lights. You can check your email. Check the news, the board, the stocks. Respond to an email and still have time to tune in channel 7 on Sirius or XM Radio. ”

8.) EJS: You own one of the most valuable private domain portfolios. Would you trade your entire portfolio for anything, and if so what?

RS: “I think we all have our “Number” in which we would sell for. I am not looking to sell, but if somebody gave me my “Number”, I might be on my way.

Can I trade for health? Happiness? A few extra days on earth? In that case I will consider cash. Sure, we all have “Our number” in which if someone wrote the check, we would take a hike. No matter what business you have or what asset you own, we all have that “NUMBER” running around in the back of our minds. But even if we get that “Number”, I doubt I would do things much different. I would always own some of my favorite domain names. I actually may do better focusing on a handful as opposed to many.”

Domain Investors “Cowboy Up”

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After the TRAFFIC auction ended and the dust settled, Cowboys.com was again for sale in the silent auction. A large group of domain investors from Rick Schwartz’s private Targeted Traffic Forum formed a group and made the winning bid for Cowboys.com. The background story can be found by clicking here.

.Mobi Steals the Show

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When Rick Schwartz paid $200,000 for Flowers.mobi, there were three general reactions from the public; he was crazy for spending that kind of money, he rolled the dice on the .mobi extension, or the bid was rigged.    After yesterday’s live TRAFFIC auction where .Mobi names fetched huge sums, I think it has become clear that Schwartz certainly made a calculated gamble, and the price of Flowers.mobi doesn’t seem as crazy.    According to Moniker, below are the .mobi sales in the auction along with their prices:

poker.mobi $150,000
ringtones.mobi $145,000
news.mobi $110,000
shopping.mobi $55,000
email.mobi        $50,000
scores.mobi $33,000
buy.mobi $32,500
podcast.mobi $25,000
cab.mobi $17,500
cash.mobi $12,500
pda.mobi $8,000
zipcodes.mobi $8,000
bill.mobi $3,000

I only own two or three .mobi names, and I can’t even remember what they are without logging into my Godaddy account.    I believe .mobi names are something to keep an eye on, moreso than .info and .net, but I am still sitting on the sidelines for the most part.    I’ve seen evidence that traffic continues to build for owners of .mobi names, and I’ve even tried to use the .mobi extension from my Blackberry on occasion (I wish Jet Blue owned JetBlue.mobi!)    

With some major corporations beginning to use .mobi, including Bank of America (who is using and advertising it), consumers may slowly begin to directly navigate to the .mobi extension when using their handheld devices.    As this happens, look for the value of .mobi names to increase.

Like the rising stock price of a hot IPO I am unfamiliar with, I will continue to watch the .mobi market and possibly invest when I think the time is right.    I still believe .mobi names are highly speculative, but the more companies that adopt the .mobi as their online connection, the more valuable these names will become, and the smarter Rick Schwartz will look to us all.

10 Domain Investment Tips for Beginners

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Sahar’s post and a thread on Rick Schwartz’ Targeted Traffic Forum got me thinking about what advice I would give to someone looking to enter the domain investment business. Since I have a couple of friends who recently started out in this business as a hobby, I have a few pieces of advice that I shared with them and will publicly share.

1.) NEVER ever register domain names with famous or somewhat famous trademarks (or trademark typos). Either you will get burned or live in fear if you buy them. Not to mention that the money producing ones are registered (mostly by keyword scripts), so it would be a waste. Additionally, stay away from domain names of athletes, celebrities, politicians…etc.

2.) Read as much information about domain names and the industry as possible. It takes a gut feel to be able to do well in this business without spending a fortune on new registrations. You may end up wasting alot of time and money registering domain names that have no meaning or value to anyone but you. I have a list of valuable domain resources in my blogroll, and you can go from there.

3.) Get a feel of what’s selling in DNJournal’s weekly sales list. See previous sales prices on DNSalePrice.com. Check out what’s closing on Sedo and Afternic as it is more likely that a rookie will have access to names that don’t make DNJournal’s sales list. It might be wise to focus on a particular niche at first (like LLL.com names or financial names for example). Try to find unregistered domain names that are similar to ones that have sold.

4.) Sign up for one of the public domain forums and read as much as you can. I believe DNForum.com offers the widest variety of information, but DomainState.com and NamePros.com are also great.

5.) Always be honest in your business dealings. Although most business is done online in the cyber world, almost everything is traceable. No matter how many online personas you may create, you will be known for what you post and how you post it. If you are dishonest, it will probably haunt you, so don’t start off on the wrong foot. There is no such thing as “easy money.”

6.) Ask some of the more seasoned domain investors for advice. I’ve met many people who have been successful in this business, and most are very willing to give out advice. Alot of people spend hours in front of their computers focusing on various projects, and human interaction is greatly appreciated. Personally, I like speaking about domain names, and it’s great to see new people in this business finding success.

7.) Read the news, popular blogs, trade journals…etc to find and become knowledgeable about current events and new trends.    Buy non-trademarked names related to those trends you spot.    Never try to capitalize on a tragedy or other event no matter how much money you can make in a short period of time, unless you intend to build a “real” memorial site. Think of it this way, would you want a New York Times headline to read: “Cybersquatter John Doe Takes Advantage of Families of XXXXXXXXX Tragedy?”

8.) Don’t spend thousands of dollars on a single name until you have a plan that does not solely rely on ppc monetization.    It is likely that the seller isn’t selling a high earning ppc name for less than market value, so it will be difficult to find a deal.    Also, don’t buy an expensive name until you have the resources already aligned to implement your plan.    As Darren Cleveland mentioned in this post, development is difficult, can be expensive, and can be time consuming.    Unless you need to act immediately, hold off on buying high value names.

9.) Do your due diligence when buying a name in the aftermarket.    As I said in this post, you should do a Whois history check, call previous owners and search the forums/boards for any issues.    If you buy a stolen domain you may lose your money and the domain name.    Aftermarket sites like Sedo are not immune from domain thieves.    You should also use an escrow service like Moniker or Escrow.com for higher value transactions.

10.). Keep good records of your domain portfolio, sales, expenses and contacts.    Use the contacts as leads for other domain names or even for open discussion.    Track your domain names as you would track stocks in your investment portfolio.    Always be honest on your taxes because the penalties could be much more than what you would gain.

Domain investing is a great hobby or profession for many people. I believe it is still the “wild west,” and as such, special precautions need to be taken when going into this business. If something seems too good to be true, it really probably is. Trust your gut, and if you need help, feel free to ask.

Did Rick Schwartz Hear from CADNA?

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A few weeks ago, Rick Scwartz blogged about CADNA on Rick’s Blog. He took a different tact than many and emailed them offering his assistance by joining their cause. As of a few days later, Rick’s email had gone unanswered. Perhaps they were on vacation since the summer was ending? Maybe they weren’t interested in Rick’s overture? I wonder if Rick ever received a response from them…

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