Chargebacks, Fraud Scrubbing, and a Domainers Perspective!

Monte: Hello everyone. Welcome to Domain Masters. I'm Monte Cahn, your host. Welcome back this week. As you know, last week we had a couple of back to back reruns. Our producers decided they wanted to head off to Jamaica to party, party mon, party hard, sit on some lay back lounges and take it easy. God knows they needed it. They were working their tails off. So I'm glad to have them all back and refreshed. I can see the smiles in their faces and its great. It's a rerun. So we're going to be back live this week. We have some exciting shows coming up. Tonight I have a couple of really great guests on, the CEO of Vindencia which is a company that provides real time transaction risk assessment and friendly fraud protection. As everyone knows, if you run an e-commerce site or run any kind of merchant services on your websites, charge fraud and chargebacks are a huge problem. This company has part of the best solution on the web. We're doing some partnership things with them in the near future with Moniker. I've seen them now at a couple of conventions and they're making great headway in this area. So we're going to talk to Gene Hoffman, their CEO, and following that, a rare and special interview with Thunny, flying in from Kuwait. Thunny is a large customer of ours, has about 100,000 domain names and really has some great insight on the domain name industry. He's been investing in domain names for quite some time and he's going to be a great guest to have on. We're calling him in Kuwait where it is three o'clock in the morning. We really appreciate him taking the time to be on with us tonight. We'll be on soon. I'm going to break for a couple of commercials and be back with Gene Hoffman. Hang with me for a couple of minutes. We're going to give our advertisers some credit here.

Commercial Break

Monte: Hello folks. Welcome back to domain masters. We're going to have a pretty great show tonight. My first guest is Gene Hoffman. He's the co-founder and chairman, Chief Executive Officer of Vendencia Incorporated. Again, this is a company focused on chargeback recovery and prevention services. Everyone knows how big of an issue chargeback fraud is if you're running any kind of e-commerce on your website's selling any kind of items. Before Vendencia, Gene has a bunch of experience in the music industry. He was director of e-music's leading internet based music inscription service. He led the acquisition of e-music by the Vendi corporation back in 2001. So he's got some e-music subscription history as well. Gene welcome to the show.

Gene: Thank you.

Monte: Glad to have you on board.

Gene: Yeah, my pleasure

Monte: So it sounds like you've worn some pretty different hats in the past. How did you get from the music, online music industry into the industry your in now?

Gene: Well running a rebill negative option subscription service actually caused a heck of a lot, about how the credit card structure works and then also, the real interesting internet companies do and how you can actually increase profitability for those companies. This business, finding chargebacks and handling chargeback screening, really grew out on what we learned at what then the largest subscription service for downloadable music.

Monte: Yeah, that's great. I know that of course that side of the industry is growing like leaps and gowns. I've seen your product and talked to a couple of your representatives now on a couple of trade shows. You guys have a pretty slick solution, probably one of the best that I've seen in the industry.

Gene: Well we really wanted to come at it a very different way. We want to look at chargebacks and there are a couple myths out there. People believe you can't win internet based chargebacks especially for intangible goods. The reality is, it's not trivial. You need to know what the card associations expect and what the issuing banks expect but you can. What's interesting is from that we derive really interesting data about customers who really are the cardholder but are still likely to cause you trouble down the line.

Monte: Right, right. So there's this big mystery about what friendly fraud is versus true fraud when it comes to these internet chargebacks. Let's go into that a little bit further and what it means to . . .

Gene: Sure. Well in fact in the past people have talked mainly about true fraud. When people are selling a physical good, a DVD player for example, it's worth it for somebody to steal a credit card number and then use that and get that DVD player shipped somewhere and then sell it or even keep it. Friendly fraud is when, for example, you're downloading a subscription service or a piece of software, its a little bit less valuable on the other end in a sense. You can't really resell it. For example, when you're signing up for a domain name, someone might do this. The issue is, if for whatever reason you decide that you don't want to pay for it, either if its adult, you don't want your wife to know about it, it's a technology site, a business site that you puttered out and you'd rather not pay for it. True fraud is something that there are a lot of different tools out there. We offer some decent ones as well. But friendly frauds are real hard to get your hands around unless you really work through the chargebacks and then also to have an experience base to figure out what people's behavior were the other sites.

Monte: Now, how big of a problem is this in the industry? How many billions of dollars are we talking about here?

Gene: You know, we're talking 5 to 7 a day on just the problem. You've got this problem both even for physical goods retailers and intangible goods. Huge problem in travel and downloadable goods and services and especially as people move away from buying CDs to buying downloadable music to buying downloadable video, you're going to see lots and lots more folks run into this problem. There are really compelling services and software that smaller and midsize businesses are going to want to offer that are going to have high friendly fraud rates to them.

Monte: Right, right. Now, chargebacks, a lot of people that do all kinds of business on the web, whether you're running adult or downloading software or whatever, have a big problem with things that are happening in Asia and credit cards that are being processed from Asian IP addresses. What can you tell us a little bit about that particular issue and how your company helps avoid that?

Gene: Well, one of the big things there is looking at a couple of core items about the transactions. Obviously, the location where that transaction is coming from versus what type of card it is and whether the actual bin matches. The bin is the first couple of digits that identify the card and bank that issued it. So often, when you see somebody coming in from Asia trying to use a card that should have been issued in upstate New York, you have a pretty good idea that something is wrong with that transaction. Those sorts of screens are obviously thrown in. That's a unique problem because the problem is you don't want to say to that person who is an Asian customer from the Asian IP with an Asian bin, we can't take your money.

Monte: That's legitimate. Yeah, and if they're legitimate, that's the other problem. Just from our personal experience at Monakur, we try to do whatever we can to prevent fraud and we do the address verification. Unfortunately, a lot of the banks that are foreign banks, it's mostly US banks that allow address verification in order to verify a credit card. A lot of foreign banks don't even support the CVV2 number or use that as part of the approval process.

Gene: In fact, you're going to find very few foreign banks at all that do it. Usually these are US only solutions. The double edge sort here is the only way to really have any data to know whether that card matches most things is to have seen it being used by the same person on the sites. That's one of the neat things we kind of bring to the table. Our network of merchants has kind of blind but trustworthy access to what other merchants are experiencing with that card.

Monte: Oh, so your system looks back and says oh, this is a valid user because they've used this card, this same number, and the same card in another proper transaction in the past before it helps validate it?

Gene: Exactly. And more valuable in some ways is, I don't really necessarily care if that person is, even who they say they are, I just know the transaction went through, it went through happily and didn't create a chargeback.

Monte: So you're able to say okay, these transactions happen from this particular user and it was not charged back which increases the validity of the charge to begin with and that keeps building up in history obviously?

Gene: That's exactly right.

Monte: Oh, okay that's great.

Gene: And one of the other things here, is most people who look at fraud end up costing themselves more money on the revenue side than they do on savings. The issue gets to be you do not want to error on the side of denying transactions. You want to error on the side of allowing transactions. That's a hard line to walk. One of the few companies who really goes out there saying that is the key.

Monte: Right. Now those that don't have merchant accounts or provide credit card type transactional processes on their site, they may think hey this is not an important issue for me, but it really is for just off the top of my head I can think of any time they used their own credit card, if the credit card companies are absorbing these fees or having these problems with chargebacks, we're all paying for it. We're all paying for the abuse.

Gene: You're paying for this at Amazon. You know, when you go out and do transactions yourself and you're looking at what online retailers are charging you, he's having to factor in this cost until it's continued to be squeezed.

Monte: Yeah, so everyone that's listening here and everyone that, everybody should be concerned about this issue whether you are doing business on the web currently and taking in charges. If you use a credit card, you're eventually going to end up paying for it because all these fees and these losses are rolled back into your credit card fees.

Gene: Right. Even more directly, lots of people who are participating in affiliate programs, you're going to start to see the affiliate programs become much more savvy about looking at whether that affiliate's driving quality traffic that actually has low chargeback risk or un-quality, low quality traffic that's causing a lot of chargebacks.

Monte: Right, right. So what should merchants do when they receive chargebacks? What's the proper procedure to follow?

Gene: Well, the first thing here is you really have to own the transaction from the front to the end. Most internet companies, because of the beauty of being an internet company, small staffing and ease of transacting, they kind of drop the stuff on the floor. They don't actually look at the chargebacks. One of the type of chargebacks you get is simply called a ticket request. It's kind of the most friendly chargeback you can get. It's basically the customer saying you know I don't recognize this. A lot of merchants out there aren't responding to those. If you don't respond to those, that's an unwanted chargeback. If you do respond, most people go oh I thought you were calling it, for example a customer of ours, Symantec is what they bill it as, but you thought you bought Norton Antivirus.

Monte: Right, so it's a misinterpretation of what server she really bought. So they send in an inquiry to the credit card company and then a response comes to the company to prove that oh no it's a valid charge and you have to justify that, that charge is in fact valid if you're an end merchant who did the charge on that card, right?

Gene: That's exactly right. The nice thing about a ticker request, it's just a kind of gentle request of the customer doesn't recognize this, can you help them recognize it?

Monte: Right, right.

Gene: That, and the other thing that can really be effective is, if you do have a merchant account, be very cognizant of what you're actually putting on people's statement because you're actual statement, billing wise, can really drive down your chargeback rate.

Monte: So like a proper description or company name. I guess we've learned the hard way on that too. Because we operate 4 different ICAN and credit registrars and we have multiple services, we've chosen a generic name on a lot of our charges called Domain Services. So they may think they did business with Moniker, and then they see Domain Services and not understand what that charge is for.

Gene: That's exactly right. In fact, depending on what your volumes look like, there are acquirers out there who will allow you to specify that on a pro transaction basis or at least part of it. That's the other thing that's really valuable so you take the main transactions, print these things Moniker.

Monte: Right, now does your system help?

Gene: We can definitely help you on the kind of consulting side of finding a merchant acquirer that are going to do those things better for you. The piece that we really bring to the table it right now people generally just drop their chargebacks to the floor. It turns out that there's huge dollars to be had there and almost all profit. When you go out and take that into the cost of doing business today, we can go out and recover 60, 70 sometimes even 80% of the entire pile of dollars that you're losing. Those dollars go straight to the bottom line.

Monte: So, what if its legitimate chargebacks from stolen chargebacks?

Gene: Well the true fraud chargebacks, and that's what you're talking about, obviously you're going to have a harder time winning on. But what's really important about those is, by actually having people actively looking through that, you learn what types of specific fraud are occurring at your site and your business. These vary dramatically from vertical to vertical and business to business and sign verticals.

Monte: Right, do you guys work on a, you know how some companies if you're having trouble collecting from a customer and you turn it over to a collections agency and they work off of a percentage of the recovery fees?

Gene: We start out working with our customers as 50/50 of what we recover.

Monte: Okay, so you work on a similar basis so you don't have to come out of pocket in order to engage your services to help with this recovery. You'll share in the risk and you'll share in the recovery?

Gene: Yeah and we love to start with kind of the first 3 months as doing exactly that. What that doesn't include necessarily is our active screening. We can show you how we can basically make it be about the same and the only charge a percentage of revenue and that's very small.

Monte: Right, oh that's great.

Gene: Most cases, we're actually going to be charging you out of found money that we're creating by fighting your chargebacks and winning them.

Monte: Oh, cool. That sounds wonderful. What can, how can you tell that you have a chargeback problem if you don't really know it. What are some of the signs to look for?

Gene: Well you know if your fax machine is running chargebacks at it, you have a chargeback problem.

Monte: Right, when there's faxing you the chargeback reports, that's right.

Gene: That's right. The issue gets to be, when you really think about the cost of doing it, you really want your customer service folks or your finance folks to be doing their primary job and not dealing with customers who . . .

Monte: I know it's a huge burden for my guys. When the chargebacks come in, to investigate and having to go back and forth. It doest take a lot of time to investigate all that.

Gene: Right, that's the other kind of hidden cost to all this. How many hours that otherwise your customer service folks would be answering active and current customer questions? Are they figuring out what's happening to the customer who will never do business with you again? We can take that off your plate and that's one of the big benefits that we're talking about.

Monte: So it sounds like you have a service that you run that you share the risk with the customer. What are some of the immediate prevention items that your system provides a company so that it can prevent fraud in the very beginning?

Gene: Well we have a core sweet of true thought screening we can make available. What we like to do actually is just start fighting chargebacks because just fighting a chargeback, it turns out that the issuing banks model your merchant number to try to figure out whether or not you're likely to dispute the chargeback. Your chargeback rate will actually go down a little bit just by starting to respond to your chargebacks. The second big thing is then that once we have a couple months of date, we can actually look through that and look at your true fraud versus your friendly fraud chargebacks and specifically start giving you risk warring that is tailored to your business based on what we see by having our chargeback team go through your chargebacks. What we find is that by being able to customize that pretty scaleably, we can really effectively cut your chargeback rate by minimum 20 to 30% and maximum something like 70 to 80%.

Monte: Wow, so it's an immediate return on investment no matter what.

Gene: That's right.

Monte: That's great. So the look for good fraud screening and scrubbing services, you want to engage a company like yours right away so that you're doing all the initial easy to screen stuff because that's what you're dedicated to do. Then leaving the business owner and the business staff to do what they need to do so that they're not spending time with this. Because I know a lot of companies probably just leave this stuff because it's too much trouble to respond and do the fax and do the responses, fill out the forms, it's a huge problem.

Gene: Right, and because we do this for a lot of people in high volumes, our general response time is under 48 hours and likely to be under 24. Part of winning is being responsive. If that comes back to the issuing bank very quickly, you're going to find you win a lot more. The other thing I would say, is if you already have some true fraud screening in place and you still have chargebacks, that's where we can really effectively help you. Usually what you'll find is the majority of those are friendly fraud. Because it's the cardholder and it's actually him using his computer and his card, those are the hardest to find. That's one of the things we have unique data about because we actually watch a lot of the merchants' chargebacks.

Monte: Right, right. Give us an idea what kind, what's your current customer base right now? How many customers to do you guys serve?

Gene: We serve about 25 customers but some of those rank in the 50 million dollar yearly level. Some of them rank down to, they make about a million a year.

Monte: Oh, wow. So they're fairly large customers then.

Gene: Yeah, we have a pretty broad base of customers.

Monte: Great, great. And you're staffing to help support that kind of growth? I mean you're probably going to pick up a couple of customers on this, from this show alone.

Gene: Well, it's interesting because we've built a lot of automation, don't have to staff at the level most people do. We use a lot of web applications and other things. We had a pretty unique experience at e-music. We were able to re-encode the entire 7,000 album library including liner notes and cover artwork and all the publishing and legal data. We got that down to about a 2 week process with 4 or 5 hourly employees. We learned how to really move those painful back office processes into a fully automated fashion.

Monte: Right, right. Now what about, I was given a question by one of our customers ahead of time, what's your view on, as he puts it, the extremely customer un-friendly services like PayPal and the fraud that comes through some of those ancillary services? You know when you do a transaction on third party service.

Gene: The thing is, is that really goes to owning your own merchant account. As a merchant, the best answer is to really say you know what, I want to get a direct relationship with the bank. I want to maintain that relationship and kind of step up to the level where I need to do that. It's not that hard. That's one of the things we can kind of do as not a core service but its certainly something we offer is the utility to help you find a merchant account, regardless of what you're risk profile looks like.

Monte: Oh so that's good because a lot of people also see that as a huge hurdle as having to mess with that. It starts off with . . .

Gene: Yeah, exactly. It turns out, it doesn't have to be as painful as people think it does.

Monte: So can you give us the 3 easy steps on getting that established?

Gene: Well, it basically boils down to you need to be able to know which ISO or payment provider merchant acquirer you should be talking to. A lot of that has to do with your revenue level and what you're doing. There's adults and son special category, we can help build there. Some rebuild business, some acquirers just don't want to do rebuild because they've had bad ideas with other legitimate rebuild services causing them trouble. Because of our customer base, we have relationships with quite a few different acquirers and ISO's that can place your business pretty quickly. So one of the things you can do, is a quick and easy way, reach out and go to HYPERLINK "http://www.vindicia.com" www.vindicia.com V-I-N-D-I-C-I-A and we'll have someone get in touch with you and help you basically move through that process.

Monte: Yeah, that sounds great. When I first met Mark Segal which I guess is one of your sales VP's.

Gene: You know, it actually turns out he is the head of the chargeback department.

Monte: Well, look at that. First of all, he is one of the funniest guys I have ever met in my life. He had some funny stories on a trip that he had through Morocco and some places.

Gene: Yeah, the Moroccan goat story.

Monte: No the Moroccan camel story.

Gene: Yes, the camel as well. The camel you can be the boy or you can be the hill.

Monte: In any case, he showed me a, I guess it was an online signature capture.

Gene: Well, yeah we haven't decided to disclose that pretty widely but we do have some solutions and I have to kind of leave it here for what do you do when the risk score comes back horrible?

Monte: Right.

Gene: Because that's an interesting problem that a lot of people haven't solved. We have some interesting ways to solve that for merchants that we'll be happy to talk about.

Monte: Oh so you can't, it's kind of under the cover right now.

Gene: Yeah, cold alpha right now. We'll launch that later.

Monte: Well, it was very interesting and that's what actually peeped my interest so I'm glad that you shared that with me and that probably ended up the reason why I decided to have you on the show. It was a good thing that he showed that to me.

Gene: Absolutely. We basically are trying to build some scalable systems so that you can know when the chargebacks are going to occur.

Monte: Yeah definitely. Well Gene, it was a real pleasure having you on. For those of you that are interested in getting a handle on your chargeback problems and you want to really engage with a company that's an expert in this field, please visit vidincia.com. I'm sure that Gene will make himself available and his staff to answering any questions that you may have. It's a service that we're going to use at Moniker. I can highly recommend it. I've seen the overwhelming acceptance to this type of technology and their company at the shows that I've been at. So I highly recommend that. Gene, do you have any other last remaining thoughts about the whole problem itself and how your company is addressing it now and in the future?

Gene: Well, I just want to say we do take something kind of unique about this. We look at it from the back end from your chargebacks and say, gee how can we prevent the chargeback regardless and why? I think more importantly than that though Monte I want to say thank you.

Monte: Oh definitely. What's a good e-mail to get in touch with you guys.

Gene: HYPERLINK "mailto:Sales@vindicia.com" Sales@vindicia.com

Monte: And that's v-i-n-d-i-c-i-a.com for those of you who don't know. Well great Gene. I really appreciate your time on the show. Coming up in just a few minutes we're going to have Alikwa on from Kuwait. We're real happy to have him on board. We're going to break for commercial. We'll be back in about 2 minutes.

Commercial Break

Monte: Hello. Welcome back. Just having a little dialing problems. Alikwa called in so we'll be on in just a minute or so. Before I have Alikwa on, I just want to let everyone know we're going to be at the SES conference. It's the search engine strategies conference next week. We'll be doing a live broadcast from there that's next Wednesday in New York, a great show to be at. For those Moniker customers that are online and listening, we're going our new site and platform launch the night of and the day of the 5th of March. We'll be sending out an e-mail for that. We're going to be down for about 12 to 18 hours while we do the conversion. We'll be sending out a message so you guys can get all your domain names registered and make all your changes you need to make because you're not going to be able to do so for a little while. So we'll get some messages out but we have some real exciting upgrades coming on board. So lets get Thunny on and talk about some domains. Thunny are you with me?

Thunny: Yes. I'm here. How are you Monte?

Monte: Great, how are you? I'm sorry about the telephone call thing. I guess I gotta put some . . .

Thunny: No problem. The lines are so busy here because the 25th of February is our national day here so it's like the 4th of July so everyone is calling all over the place.

Monte: That's great. I really appreciate the phone call and I guess I gotta put some credits in your account for the long distance.

Thunny: Oh I don't mind. I'll lend you debt.

Monte: Definitely. So how are things in Kuwait these days?

Thunny: It's not bad. It's cold.

Monte: Yeah.

Thunny: The desert's cold so it's kind of a different cold from down in D.C.

Monte: Yeah. A lot of people have some questions about who Alikwa is and you've gone undercover for many, many years when you're acquiring domain names. One might say that you've come out into public and actually been quite a benefit to many domainers and to a lot of companies because you've had so much experience. How did you go about getting in the industry from the very beginning?

Thunny: That's a long story. Actually back in November 2000, I send out, I came back to Kuwait. I finished college down at AU. I was a DSA major with a master of fine arts. I had a painting sculpture. I came back to Kuwait and I saw Heno. He called me back. My father said you have to come back and work. I came back. I sat down with my cousin. He's been buying a few names here and there. He asked me do you know what domains are. I said no. Are those websites? Lets go buy one. He said well you need to have an e-mail first. That's when I had my first e-mail. After that, it was December 2000 that's when I registered the first domain I ever owned which was nicor.com. I started buying .TV names in the beginning. That's how I got into it. Then I got afternickdays and so on.

Monte: Right. One would say that you got in a little bit late but you certainly made up by going out and acquiring some of the best domain names in the entire industry.

Thunny: I had help from the sellers out there. They helped me out a lot.

Monte: Right, I'm sure. But it helps also to be able to have some of the resources to be able to buy those domains. What are some of the best domain names that you own? I mean I can name a couple but it would be nice for you to rattle off a couple.

Thunny: Oh god. There's a lot. Media, multimedia.com, jackass.com, cool.com, monsters.com.

Monte: Yeah, so you have some of the top domain names in the entire industry. You've gone out and gotten a lot of those in the after market?

Thunny: Yes, I did.

Monte: And you've . . .

Thunny: It was basically impossible to register any of those. They were all registered back then.

Monte: Right, right. So you've had, you've made quite an investment in the industry so obviously you believe it not only short term but you believe in the industry long term . . .

Thunny: I do believe in long term, yes.

Monte: Right. You're one of, also one of the elite domainers that actually believe in some of the other extensions such as the dot info extension. Explain and let the domainers on that are listening about what your philosophy is and what your feelings are toward some of the ancillary extensions and why you believe in them so heavily.

Thunny: Well, I believe in long term not short term because I'm not a seller. I don't buy and sell. If you look at it like buy domains and sell, it's more reasonable to buy big batches and it doesn't hurt. To diversify it helps your investments. It helps in every angle. I look at it being a long term kind of thing.

Monte: Right. So where do you see for instance dot info going long term in terms of that investment? What are your plans for those types of . . .

Thunny: It will have a market sooner or later. The traffic will increase but not now, in the long term.

Monte: As more and more people get on the web obviously, and the dot coms are all taken, a lot of these extensions are going to be valuable and there's going to be a lot of traffic.

Thunny: Exactly. Well, around the world is kind of different from the US. When we look at America we just at dot com. Around the world, they can't find dot com, net, org, info, bus and they go to their own extension, country extension. They'll do anything they need to do just to get the actual name they need to start their business. In the US they're more concerned with dot com. You can't blame them. It's the best. You can't go wrong with a dot com.

Monte: Right, right. Well you've been able actually to kind of create your own market or your own run on the market. Just for example, you've registered literally thousands of dot info names at a given session. You kind of own the majority of the three character letter dot info domain names and a lot of dot org names in that arena, don't you?

Thunny: Yeah. A lot of dot coms. I bought those way back when they were 299 dollars. It's so odd. Half of them were expensive back them. They came with big bucks.

Monte: Right, right. Then of course, the dot info's you've been able to register a lot of those.

Thunny: I'm sorry I didn't hear that.

Monte: You're dot info's, you've been able to register a lot of three character dot info names.

Thunny: Yes, a lot. I cleaned up the whole thing. I cleaned up the credits also those guys.

Monte: Yeah, I know. You ran through them.

Thunny: I didn't know why I wasn't able to register anymore. It just kept giving me and error. I'm like what's wrong with Monte's registrar.

Monte: Yeah, you ran through the credits.

Thunny: You told me you ran me out of credits.

Monte: Now we have plenty of credits for you.

Thunny: Yes, I'm going to need that.

Monte: Yeah, definitely that's for sure. So one of the things that intrigues me I know and intrigues a lot of people that are listening is the market in the Arab and the middle-east is its up and coming in terms of the domain industry, isn't it?

Thunny: Well, yes. I want to talk about that because I can't explain it in writing. I tried to explain it in Wick's board once. Even if I try to explain it, you can't understand it unless it's verbal. The Chinese numerical numbers actually, they present characters in their alphabet. Arabs, the actual letters, a lot of Arabs started speaking English so they took shortcuts and they took the letter 3 for example for the letter AAA. So if you speak Hebrew or Arabic you would understand. It's AAA, so when you say Arab it's Arab. Therefore when you have 3, 3RB, 3ARAB, or 3RAB, is Arab. It's the same meaning.

Monte: Oh wow. So in this particular case . . .

Thunny: So the letter, exactly. They have replaced them. The numbers replace the actual character. A lot of guys have asked me about this but phone if you have any problems, just ask me, I'll send it to you. I wasn't able to explain it online because there is no way you could actually explain that. The letter 7 is HA. The letter HA. See if you are these Arab domainers that shrink domains and you see they have huge traffic and people just don't understand.

Monte: Right, and it's because people are shortcutting it.

Thunny: There's one other reason actually.

Monte: And so, in the domainers in the Arabic and Middle-eastern world, so they see a lot of value in a lot of these, in the characters, in the short character type names that actually have numbers in them?

Thunny: Yes, yes, yes. And they're more concerned with actually their names that actually relate in the market. A lot of times when I try to spend with foreigners, the majority of the Arab world, 70% are under the age of 35 while in the US and Europe, it's the opposite. So you have a bigger community out there. So I always tell people you should have Arabic in your website. You should have it Arabic enabled because you're going to get a lot of traffic from Arabs. They're always online just like the Chinese.

Monte: Yeah, the Arabic world, I'm sure some people know this, but they're pretty well wired. I know Saudi Arabia has a hell of an infrastructure.

Thunny: Well you have to do by internet city instead of by 3 billion dollars to do that. It's hosting over 50,000 companies. Dell is out there, IBM, everyone is out there.

Monte: Everybody is like wireless. You can go wireless around almost the whole city.

Thunny: Oh you have wireless everywhere.

Monte: Yeah, in the United States, Philadelphia just announced that they're going to have the United States first wireless city. Many of the Arabic, in many of the Arab countries in the middle-east, they're already wired and have been for some time.

Thunny: The only disadvantage we have is it's very expensive. Actually you get a very static connection. But for example you don't have an actual source of internet. You're linked from Germany through the satellites. That's their main camera. That's where their main internet source is and the area connections come from through satellites from Germany. New York it's a lot more cheaper to get a connection. I have a 2.4 ADS in Kuwait and we don't have cable connections here so ADS connection is the fastest or a landline via satellite but my ADS line connection was $8,000 a year which is extremely expensive.

Monte: Wow, that's very expensive.

Thunny: So a lot of people are still on dial up here. A lot of American companies who have actually flashed what people can access for the year because its so slow.

Monte: So in one way, it's advanced because there's a hell of an infrastructure but to get high speed access, it's very expensive?

Thunny: Yeah, yeah. If you're residential, I can't go over 2.4 in my home. If you're a business you can go much faster but it's very expensive. The maximum residential connections are 128. That's not even fast enough.

Monte: Right. Well, getting back to your domain names, you've masked quite an inventory. There's very few people, a matter fact, there's very few individuals that own an up-words of even 1000 domain names. You're pretty proud of the fact that you have about 100,000 domains. You're right at 90 to 100,000 domain names now correct?

Thunny: Yeah, around that, yeah.

Monte: Again, if there's anybody out there that's questions whether domain names are a good investment . . .

Thunny: Well, actually I've had an advantage over a lot of people. I was fortunate to have the money. I dedicated myself to this. I didn't sleep. I'd sit sometimes for 2 or 3 days, no sleep. I'd actually fuse a transaction 2 days.

Monte: I'm keeping you up right now since its 3:00 in the morning there.

Thunny: Yeah, yeah. It really helps me out a lot. It's tough, I feel it right now. I'm burnt out right now in a way. But I feel it.

Monte: But you have some projects on the plate. Why don't you talk about some of those projects? You have oxide and of course FMA of the company that you kind of have all these domain names running under. Tell us about what it currently does and what you plan on doing with some of your websites in the near future.

Thunny: Well, actually it is really a holding company to everything. I had to get everything incorporated actually to get everything done. DJ, actually dg directory but dj's online, it's free right now. I'm working on something right now where you can actual start having memberships on it, silver, gold, platinum memberships for dj's and it can have different options. It's going to be pretty cheap starting probably after the summer.

Monte: Right, that's dj.com?

Thunny: Dj.net, dj.com is already owned.

Monte: Oh okay, dj.net. Okay great.

Thunny: I have mp3.net. That's the first website I ever had. Its, right now, it has an emerging showcase. It's not something very selective of who actually can come in or not. I have a writer who writes daily articles. I sponsored the Italian, it's called the rigia group, they're the largest car dealer potential actually. They had the challenge team and now they moved to vipers, dodge vipers and I sponsored them for about 2 years. That was a good thing. I'm actually revamping the whole site. We'll start selling mp3's and so on. Oxide is just a simple, a web search possibility. I'm working on it pretty hard. It's kind of slow right now.

Monte: Well, you have a lot of things going on. Plus, you have a family business that you're working with. When you spread yourself across so many different channels, it's sometimes hard to stay focused but you're certainly making a great effort in this area, that's for sure.

Thunny: I'm trying, I'm trying really hard.

Monte: Right. What are some of the other projects? What are you going to do with media.com which is such a great name?

Thunny: I'm just holding it. Every so often I just finish oxide and mp3 and dj. I'm almost finished.

Monte: Can you, do you feel comfortable in sharing like the biggest domain purchase transaction that you've made thus far since you've started investing in domain names?

Thunny: I didn't spend that much really. I never went over 150.

Monte: You never went over 150,000?

Thunny: Never.

Monte: And some of those higher priced domains, what were some of those purchases? Some of the larger domains?

Thunny: Like 150 or 100.

Monte: No, I mean what were the domain names that were actually purchased.

Thunny: I can't talk to you about those because they're under contract. In public, they weren't that expensive, no. I'm very patient. I'll just wait for a name for 2 or 3 years.

Monte: Yeah, I know. Well if you remember back, you and I first met over the internet, it was about 3 years ago.

Thunny: It was about my.com.

Monte: Yeah, my.com, that's right.

Thunny: I had no idea who you were. I just looked at domain names and I was like what's that?

Monte: Yeah, we were representing that name for sale. The seller . . .

Thunny: He wouldn't sell it at the price I want it.

Monte: Yeah, it's a great name and he still wants a lot of money for it. It is a great name but that's how you and I first became . . .

Thunny: It's worth every penny to be honest with you.

Monte: Yeah, it's a nice name because it certainly could be representative of the whole entire internet. The important things for you to manage inventory like you have, what are some of the things that you do to help manage a large inventory like that?

Thunny: You guys. You guys are helping me out a lot. Honestly, no all the registrars. I've had a lot of problems with additional registrars they just go and lock your name. Names move from your account to a different account. This could be due to a natural system. You always worry that people are going back online and checking to see if the name is still there. There's certain registrars that just kind of keeps coming back.

Monte: And of course we're very happy to serve you as a large domain name owner.

Thunny: Thank you, thank you. It's nice being in Monakur. I mean it's a great place.

Monte: You actually own a registrar tag but you choose to use us to manage your domain names. But that registrar tag is going to have some marketability and I know we're going to possibly help you with that registrar tag. What are your plans for that registrar?

Thunny: Still working on it. It's a big responsibility to own a registrar. I have to really be ready for that when it goes live. When people start registering for names and you have to be there for those guys. I'm not ready for that yet.

Monte: Right. Well I mean its great that you have it and of course we're going to help you when you're ready to get that thing going.

Thunny: It should be soon.

Monte: I understand that it might be targeted for the Arabic and middle-eastern community which is an area that not many people focus on.

Thunny: Yeah, it must be Indian and North African.

Monte: Now, that whole market, the North African market and the Indian market, where do u see, because you spend a lot of time in that market as well, where do you see the future of that market going?

Thunny: I really see that part of the world as really funny because with the W, what do you call that, the World Trade Organization, everything is moving towards China and India because of cheap labor. The whole companies are moving there. These guys are becoming more aware. If you look at Iran, India, people have been registering and now everyone is just going there and registering and registering.

Monte: Yeah, they're registering a lot of names.

Thunny: You've seen those people from years ago. Most of the time you see these guys registering names like why are these people registering such names? They don't make any sense but it makes more sense to them.

Monte: Especially now that you've revealed a little bit about why some of the number, the domain names with some numerical characters make sense.

Thunny: Yes, they make a lot of sense to us. The Chinese, they're basically a part of their alphabet, the characters. To us, they're a case to Arabic collectors where you cannot actually have them in English because it's like AAB is ARAB and C is like A. It's not like Arabic, is Arab you know. They use the letter instead.

Monte: Right, the letter which is like a 3.

Thunny: Yes so when you actually register a name in Arabic and actually laughing characters is when you have an Arabic name, you have to cover all your different angles. There's probably 20 different spellings to that.

Monte: Right, right. Yeah, because people could mistype or think that they're going somewhere obviously, just like we do here when you have misspellings of domain names and you want to cover yourself. There it gets a little bit more complicated because you have to cover yourself in English and with the numerical characters. So you talked about the number 3 and then the number 7 so what other numerals represent letters in the Arabic alphabet?

Thunny: To be honest, I think there's about 6 more to go. The letter 6 is tah, like when you say tullah, the name tullah. In Arabic it's allah, you use the letter 6 instead of the T. And you can actually use the letter 6 without the A after it too.

Monte: What other numbers?

Thunny: 9 means tha. Yes. It's very close to actually all the phentic languages. It's phentic, aremag. They're all basically the same alphabet.

Monte: So Hebrew actually has some of the same letters as well.

Thunny: Hebrew is Arabic. When you say arabe, it's arabe. It's the same language. And the forest is the person exluse the person is different in their grammar they don't have feminine and masculine so it's kind of a little bit different, always one end.

Monte: Yeah, that's very interesting to know that those numbers mean other things.

Thunny: That's why I told you that you should always have Arabic in your interface. It really helps.

Monte: Well, you're going to help me with that because I think that's something that we're going to want to do.

Thunny: I can't type Arabic on a keyboard actually.

Monte: Well you said you mentioned that you knew a company that can trans . . . .

Thunny: Yeah, there are plenty of companies that do that. The largest ones are down in Detroit because that where the largest communities are in Canada in Windsor.

Monte: Yeah, I'll have to get those names from you when we launch that effort. That's fore sure.

Thunny: It will help your market.

Monte: Yeah, definitely. Now what's your, just off of the domain name, the domain name business just for a second, we'll pop back on, but what's your take and how are the qweties in general in your market, what's the take on the whole issue with Iran and the nuclear effort that they're building? I'm just curious as an Arab and as somebody who lives in the community, what we're hearing and reporting versus what's really going on from your neck of the woods?

Thunny: On what? On politics?

Monte: Well on the Iran effort for their nuclear advancement.

Thunny: I have no, I don't even watch TV to be honest with you. I have a boring life.

Monte: Well in case you didn't know, they're building a nuclear facility and of course we're . . .

Thunny: I heard about that. I don't watch because I'm always online so by the time I'm offline I'm just watching fashion show and MTV or something and just trying to relax.

Monte: That's great. That's great. Hopefully I can be in your shoes someday.

Thunny: We get MTV Europe which is much better than . . .

Monte: It's like the R rated version of our MTV?

Thunny: No, it's more like avisa kind of style music. It's my kind of music which I like. It's like fashion kind of music. I don't watch the news anymore.

Monte: Alright, what else can you tell us about the domain name industry that will help other domainers like yourself, you know help them . . .

Thunny: I think its really good that we made very big soon and just diversifying really helps you a lot. You can't stick to one thing. You have to keep on going. Pick all different extensions and move on. Everyone is registering means going crazy to be honest with you. I know guys in Kuwait who have kids who are buying names. They don't even know what they're doing. They're just buying and buying. It's really the future. If you look in Kuwait they guys, the e-government, the whole government is going to be on the net.

Monte: Yeah, the whole government is going to be on the net for sure.

Thunny: And they're doing that all over the Arab world. I think China, everywhere. It's really blooming. You need to have a domain. If you haven't been to a domain, you really don't have a presence anymore. Even if you don't need it, you need to have a webpage.

Monte: What, oh here's a couple of questions that are coming up in the chat room. What kind of factors are you considering when you're looking for expired domains with traffic?

Thunny: I didn't get to the expired domains until about 2 years ago. I would just find names from fellows or actually from great domains or actually the old days. If you go against you guys, their main systems. Most people actually look for traffic names. They don't care what the name is. They're just looking for how much time wasted its got. I scratch names I like. I get lucky. I get lucky but most of the time I don't have traffic but I think they're good names.

Monte: So you're using a little bit of instinct, a little bit of luck, and what you're personal feelings are on some of the domains. Maybe today . . .

Thunny: You have like, go ahead.

Monte: I said maybe today they don't have as much traffic but looking at some of your inventory, you would think that many of them, if they don't, they will soon.

Thunny: They will. Sooner or later they will. I have domains that had no traffic before and now there are movies under that name. (CAN'T UNDERSTAND WHAT IS BEING SAID!!)

Monte: So you don't really look at stats at all. You don't really care.

Thunny: No, I never did actually. I never did.

Monte: Well, I can tell you have some very good instincts.

Thunny: Go ahead.

Monte: No, I was just saying that you have some very good instinct though because of the names you're picking up, not only in the aftermarket and the drop side and the expired name side plus the ones you're going out and acquiring are excellent names.

Thunny: I get lucky. I'm lucky. That's all. I had some good luck. I have great people to deal with. All the guys I bought some names, they're excellent guys.

Monte: Have you ever had a problem with domain theft? Has anybody ever stolen a name from you?

Thunny: No. I've just had one of the registrars, actually I had 2 of my domains actually they moved to different accounts and I had no idea how. I called them up and they actually put the names back. Then that's when I started to get worried.

Monte: Right. That's when you started migrating over to us. That's right.

Thunny: Actually, I came to you guys when I bought a few names from Stellar. I actually had the names there.

Monte: Well, it's been a good move. People are asking are you using PPC and yes you are but you're redirecting through oxide but you're trying to . . .

Thunny: Yes. Usually a lot of people ask me this question. You can go to a lot of companies out there like domain spa. I can't remember all the names.

Monte: Like domain spa.

Thunny: You make so much more money. I'm more concerned with branding. I really want a brand oxide. I don't want to just make money off of it, I want to make a name out of it. It's really tough. I can hold on to this because I don't need the money immediately right now. Branding is the most important thing to me right now.

Monte: You're in a position to really focus on branding. It's really important. A lot of folks out there obviously are in a position where they need to make the money and want to monetize the domain name experience as soon as possible. It's nice that you're in that position and the brands that you'll have a lot of success trying to brand and branding your platforms and your different websites as a result of that. So that's great.

Thunny: (can't understand)

Monte: Yeah definitely. Well Thunny I really appreciate your time. I know it's late for you. I'm thankful. I know that you probably don't do too many interviews.

Thunny: No this is actually the first one. The first one I've done was about Ron Jackson and donaldduck.com.

Monte: Yeah, definitely.

Thunny: A couple of guys have asked me about, I don't remember what the question was. It was a new factor of domain. I didn't understand the question when they asked me the names though. If you have the question I can answer but I don't understand the question.

Monte: Oh okay. Well maybe if you hang on to the chat when we get done with the show you can try to answer some of those questions. Again we really appreciate your time and I appreciate you as a customer and as a friend. I'm glad that you've taken the time to be with us tonight. I know a lot of people wanted to hear who you were and your voice. I'm glad we were able to bring it live half way around the world. Thank you.

Thunny: Take care. Thank you very much.

Monte: Okay. You too. I'm sure we'll be in touch very soon. Again I want to thank my guest Alikwa and Gene Hoffman from Vindicia. Two great guests. Next week we'll be broadcasting live from SES in New York. We'll probably have some people off the show floor. Should be pretty exciting. It's a huge show all around the online advertising PPC and search engine optimization markets. So I'm sure we'll have some interesting guests that will join us next week. Thanks to our producers and webmaster radio and I will see you next week from New York. Thanks to our advertisers. We'll have those archives coming soon. I promise. Talk to you soon. Bye.

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