Frager Factor

Wednesday, December 01, 2010

Mike Mann on Development: "it's only going to be realistic to build 10 or 15 at the same time"

"I would say even if you do have big bucks, if you want to be in the insurance business, I think you're better off building Insurance.com spelled correctly as opposed to the company that started Esurance.com. That company had enough money to build a great brand. Then Insurance.com came after them. They just had a better name."


Philanthropist and serial entrepreneur Mike Mann founded BuyDomains.com, a very valuable domain company, as well as numerous other companies through his WashingtonVC Internet business incubator. Mike also founded and launched GrassRoots.org and The Make Change Trust. He also authored the popular EBook, "Make Millions and Make Change for Entrepreneurs and Non-Profits." Today he's working on Phone.com, a next gen telecommunications company based on the name he acquired in the aftermarket.

Read part 1 of Jeff Zbar's 2 part DomainSuccess.com interview where Mike discusses domaining, entrepreneurship, and how the two can benefit philanthropy.

Jeff:

Mike, tell us a little bit about how you've been able to parlay your success in domains to benefit some of the philanthropies you've created and worked with.

Mike:

At BuyDomains.com we built systems to buy and sell lots of domain names, and we tried to obviously create profits from that experience. With those profits we helped fund a charitable fund called Make Change Trust, which supports lots of different 501c3 charitable organizations. With that same set of funds, we started one particular charity, GrassRoots.org. GrassRoots.org benefits from Make Change Trust, and we leverage domains certain ways. A lot of the same technologies and ideas that inspire traffic and inspire customers that we do in our businesses are the same sort of ideas of acquiring traffic and acquiring customers that we do at our businesses are the same sort of ideas we attempt to apply to the charities we work with.

Jeff: I understand that GrassRoots.org just signed its 1000th member charity.

Mike: Yes, that's a big thing for us. Shane Hankins and Katie Winterbottom operate GrassRoots.org on a day-to-day basis, and they've been perfecting the system, organizing lots of valuable free services for charities, and then signing up and organizing charities and providing customer services. Their team helps them in a variety of ways with those 1,000 charities. The goal is to sign up another 9,000 charities so we have 10,000 charities. The idea is to be able to provide those 10,000 charities $10,000 per year worth of free Internet and business services. If we achieve our goal, we'll be delivering $100 million a year into the non-profit community. That's just through GrassRoots.org. Also we will continue to operate and fund Make Change Trust which gives a way to support many additional charities.

Jeff: Any timetable on the rest that you want to sign up? It's a pretty audacious plan. What's our timetable we're looking at?

Mike: I think we're building an efficient, scalable system. We're trying our best similar to the way we try to build our business systems. The systems are looking pretty stable, and this 1000 member milestone is a big sort of event for us. We believe that we're on the path to be able to sign up an additional 9,000 in about three or four years from now. Then we will have reached our goal of signing up 10,000 members. You'll see four or five years from now we'll also make sure we get each of those 10,000 members $10,000 worth of free services. Currently they're provided $2,000 or $3,000 worth of free services a year and there are about 1,000 charities. Doing the math, you can see that ramping up 10,000 charities at $10,000 per charity of value is $100 million of charitable value delivered by GrassRoots.org assuming we achieve our goals. Of course I always, not assume, but I always believe we will and work towards it. I think that's the core message of my book is creating ambitious goals and going forward until you reach them.

Jeff: I know that one of your first sales was $25,000 for a domain you had paid about $50 a year for. I think anybody listening would say, "Hey that's a great entree into a market in helping someone garner an appreciation for a budding industry." Tell us a little bit about that success and how it affected you.

Mike: I owned an Internet service provider and web developer called Internet Interstate. Then it became part of Verio. Back then, I owned the means to build websites as mostly an attempt to entice customers. For example I bought Menus.com. I was hoping some of the national restaurant associations would become my clients. I said, "Hey, I have this great name for a website and a great idea for an application, etc." But a bunch of the names that I bought and registered, those companies that I was soliciting had no interest in building a meaningful website. They didn't understand the brands, the domains, etc. The ones we did not build sites out of I ended up continuing to own, and at some point somebody offered me $25,000 for Menus.com. There had been a very rudimentary site. I thought, "Man, this is the best thing. $50 a year for the registration and I just sold this thing for $25,000." At that point I just wanted to figure out how I could get lots and lots of these names and try to sell them for as much as possible. Ever since that light bulb went off in my head many years ago I still have that same idea. I still want to buy low and sell high.

Jeff: How realistic is that in today's market, and what type of domainer to you have to be for others to make that happen? Can you even make that happen today? What does it take to make that happen in today's market?

Mike: I like to think I have a slight strategic advantage since I've been doing this stuff for so long. I've hired what I think are the best Internet and domain technologists that help me build my domain company, DomainMarket.com, as well as all of our other companies, Phone.com, Seo.com, Software.com, Graphics.net, etc. We've hired people that are very high level Internet experts to get the job done. There's a lot of investment and a lot of risk built in to operating in that manner. I think a one-person entrepreneur could do lots of damage, but hopefully not as much damage as you cold do with a whole team and funding and sophisticated software systems, etc.

Jeff: It's interesting that a lot of what you speak of is the American dream in the world of domaining. What is your suggestion and your advice for somebody who may want to quit their job and make a nice income in domains. You have a team surrounding you. What does it require as far as marketing savvy, tech savvy and entrepreneurial chutzpah in order to be able to go and make this happen?

Mike: Really, people need to be extremely motivated. They have to study all the details of their market. They have to try to look for their own unique, strategic positioning, their own unique value proposition, and their own unique brand. With all of that, they need to fill in the content. In this case, purchasing domain names and attempting to either sell them or monetize them in some way or the other. I think it takes a tremendous amount of motivation to make any money doing anything, particularly in this economy. I think domains are a pretty confusing little marketplace. It's easy to get tripped up in various respects. Inversely, there's a lot of hidden opportunity if one pays attention to what's on the market as far as domains and how to do the most optimal marketing of their domains, websites, traffic, etc.

Jeff: You said that the domain market is part of a booming Web 2.0 eCommerce market. Where is that intersection and where do you see that going in the future?

Mike: The idea here is that within the domain market there are some domains that are so exceptional that we want to build them into corporations essentially. If you look around, you started MikeMann.com and you click on some things, this is what you find when you click on some things. For example, one of the best names we own is Skateboards.com. If you go to Google, click on search, on the word skateboards number one is our domain Skateboards.com, bam. You click on Skateboards.com, hopefully it pops right up and you buy a skateboard like a bunch of other people do. The idea here is that you will continue to peel off many of the best names found at DomainMarket.com. You can see a lot of good names listed right here on the home page. By the way, this isn't the real website. The real website is in development, and it will probably be launched in about a week from now. You'll see a really cool website. This is kind of a temporary website, however the eCommerce is enabled here and people do buy domains right off this site and it works perfectly fine. It's just not the proper design obviously.

In any event, within domain market we want to pick out the best domains and build awesome websites out of them. You can see we built a corporation called SEO.com using a premium domain name. In this case SEO.com is actually a consultancy. They're search engine optimization experts obviously. It's not really a website. This is actually a consultancy with probably 30 or 40 employees at this point. Graphics.net is a graphics design company. Our best company is probably Phone.com. Lots of very innovative, next generation services being offered there. Very highly integrated and a lot of really cool stuff. In any event, the point is that you want to take the very best domain names in the world and build the very best corporations.

For example, here are some of the domains that I've already purchased that I want to build websites out of. Probably about half of these, we'll actually build websites out of. The rest of them will end up getting kicked back and sold as domains. At the same time, we're continuously doing the world's best domain names in order to build companies. We also want to sell some as long as there is a big enough profit, but the main idea is to build excellent, profitable websites. In this case, you can see these are applications that we want to build. These are names that we own. One cool domain here Wi.Fi. Obviously you see Skateboards.com, a great site. Killer domains. Many of these sites have inherent traffic already, regular type of graphic.

Jeff: You have a tremendous library. I wonder how you choose what you want to run with. How many domains do you own?

Mike: I have about 5,000.

Jeff: Of those 5,000, how do you decide which are worthy of some form of development or sort of execution upon as opposed to having them sit? What's your determining factor?

Mike: First off, we look at the best name, essentially the most valuable name. Obviously Phone.com, Software.com, SEO.com, are clearly the most valuable names among them. Skateboards.com of course is very valuable. Let's say you take our 100 most valuable names, then we'll look at the ones where we actually believe we can deliver a strategic commercial advantage in the marketplace. If we believe we can deliver excellent quality leads say Houses.com. I don't really want to sell houses, I don't have a strategic advantage selling houses, so therefore despite it being a valuable name out there, I still don't want to build it. Therefore, given the top couple of hundred names that I have access to, I'm only going to want to build 50 of them and it's only going to be realistic to build 10 or 15 at the same time.

Jeff: Based on what your inventory or library is, you choose on what you have or you buy based on what you see opportunities. We've had other people talk about exploiting opportunities and seeing what's out there. Isn't successful domaining a matter of marketing and branding as opposed to developing a site that's too generic a brand to build out? You've touched on it. Go a little bit deeper in that area.

Mike: As far as contextual branding and domain names?

Jeff: Sure.

Mike: I think that it's really best to have an exact, perfect match. Everybody wants to make up a full company name, copy the success of the Silicon Valley interesting named companies, but the issue there is that unless you have millions of dollars you can never expose that brand to the marketplace enough to get it to catch on from a viral brand. You have to be starting out with big bucks in that industry. It's still a risky proposition even then. I would say even if you do have big bucks, if you want to be in the insurance business, I think you're better off building Insurance.com spelled correctly as opposed to the company that started Esurance.com. That company had enough money to build a great brand. Then Insurance.com came after them. The issue there they just had a better name. They have a better name, [inaudible 0:20:33], they're building value in the name. Let's say they can [inaudible 0:20:37] up if they paid a million dollars to Insurance.com. They can do whatever the heck they want with that and if their business sales, the domain is still going to be worth more than what they paid for it because domains go up value. The best domains go up in value faster than other domains. They've been doing things to drive traffic into branding within that domain. Conversely, Esurance.com really wouldn't have any intrinsic value other than whatever you could do with the traffic and permanent links on the Internet. I would say if you have a low budget you have no choice but to gain awareness of the target market and gain awareness of the alternatives. If you're a bigger company, I think I would make it a case that even though you can afford to do branding on interesting names and brands, that's still a better investment than than Esurance.com, brands like Software.com, Phones.com, SEO.com, Weather.com, etc. To be continued

Please see MikeMann.com for links to all of his current and past activities, including downloading his free EBook, "Make Millions and Make Change."



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