Special Interview With Monte Cahn of Moniker!
09/01/2006 - Ian Collier
Monte Cahn is the founder and CEO of DomainSystems and Moniker.com. In his interview with Ian Collier (a.k.a. Badger) of Radio NamePros, he shares a wealth of information from an inside perspective on the domain name business, as well as identifying opportunities for investment and growth for newcomers to the industry.
Monte is one of the true pioneers in domain names and has facilitated many million dollar domain name sales. It is a special privilege to be able to bring to you this special edition of Radio NamePros.
Ian: Hello, everybody and welcome to Radio NamePros. Ian Collier, a.k.a. Badger here and it’s my pleasure to welcome you to what is my first attempt at being an IDJ. [inaudible] but it might just possibly stand for Internet Disc Jockey. [inaudible] or be it one without any discs.
My guest today is Monte Cahn. To give you a brief insight into who he is, for anyone left in domaining that that doesn’t know [inaudible], Monte is the founder and CEO of DomainSystems, Inc., the parent company of the domain traffic monetization solution website, TrafficClub.com. He’s also the CEO and founder of 12 ICANN accredited registrars, of which one we probably all know of if the industry leading registrar, Moniker.com. DomainSystems and Moniker have been pioneering domain name and aftermarket services since 1999 and they are renowned throughout the industry as having extraordinary customer focus, domain name sales, domain security as well as a high level of customer service and value-added products and services. Monte has more than 18 years experience in the healthcare, high technology and Internet field and is a successful sales and management professional. Highly experienced in marketing and selling Internet service, intellectual property, domain names as well as other online information systems and services, Monte started investing in domain names in ’96 and helped start the first online domain brokering business on the Internet in the same year. His successes include participating in the industry’s first domain name sale of over $1 million with the sale of WallStreet.com and the industry’s for $2+ million domain sale of Autos.com in 1999. There is no doubt, certainly to me, that two industry record sales where partly responsible for the dot com buying and selling frenzy that started in the late nineties, early 21st century. Monte is also responsible for co-developing the industry’s first recognized domain appraisal system and today his company has completed more than 450,000 appraisals for his customers. Outside of domaining, Monte has also owned several successful businesses and significantly contributed to the initial public offerings of Pyxis Corporation and Medical Logic, Incorporated. Monte is currently on the board of the World Association of Domain Name Developers; he’s also the host of the free Internet radio show, Domain Masters on WebmasterRadio.fm, a show that I actually had the pleasure of being interviewed on a few weeks ago. He graduated from the University of Kentucky with degrees in Marketing, Biology and Business Administration. Monte, welcome.
Monte: Thank you, Ian. Glad to be here and thank you again for being on my show.
Ian: No problem what so ever. I mean, that was a bit of a long, tongue-twisted kind of introduction which was pretty obvious I was reading. But, you okay today?
Monte: Yeah. Just another really busy, hectic day and lots of good stuff going on in the domain world.
Ian: Great stuff. Okay, before we get to the bones about domaining, do you mind if I ask you just a few questions about yourself?
Monte: Sure.
Ian: I see from your resume that you kind of left your options open when it came to education. Marketing, business and biology?
Monte: Yes, I did.
Ian: Excellent.
Monte: The reason for that was that when I was a little kid, my grandmother live in San Diego, California and she used to send me weekly news articles about the biotech industry, which is . . . that was the hub and still is considered the hub of the biotech industry, which is right around the San Diego/LaHoya/Sereno Valley area and as a lot of grandmothers try to do and a lot of senior people in your life, they try to guide you to a career. You know, back then I probably wanted to be a truck driver or something and she guided me to the biotech industry and so I literally grew up, both junior high, high school and college career about getting into the biotech industry. So, she used to send me these weekly articles that was out of the biotech section of the newspaper and that was the reason why I went into a special program that only the University of Kentucky offered in the United States, which was a biotech degree that was basically a mix of biology and marketing. University of Kentucky is the #1, still I think is the #1 pharmacy school, for training, you know, pharmacists and because of that their hospital and their laboratory set up is pretty intensive and I went to classes and then spent a lot of time in the laboratories and training for biotech career. They were also a testing facility for some of the largest biotech equipment companies, like Toshiba Medical and Hewlett Packard and so and so forth. So that’s why I have that type of a degree.
Ian: Yeah, right. Are you still interested in the bio market or . . .?
Monte: Yeah, I was in healthcare for 15 years until I got into the Internet and actually it was because of the healthcare industry that I actually got into domains, so . . .
Ian: Alright. Educated in Kentucky. Is that where you grew up or is it . . .?
Monte: No, I grew up in Cincinnati, Ohio, which was about an-hour-and-a-half away and I also lived in New York for a little while and went to school at the University of Kentucky not necessarily because I was close to that particular college from Cincinnati but because they actually had this program which was kind of unique and so that helped me get there.
Ian: Right. And so you ended up with a business in Florida.
Monte: Yeah. The day I graduated . . . I actually started my own medical business while I was in college still, in my last year. I became a manufacturer for a bunch of medical equipment companies, some special cardiology equipment and I sort of started my own business, in college and then in my last semester of college, I went down . . . I investigated where the most doctors per capita was in the United States so that I had the best chance to succeed, you know, if I was going to go out on my own out of school (which is very hard to do), so I took a chance and I checked out Florida, you know, Arizona (Phoenix area) and Southern California area and chose Florida because they had more doctors per capita in the United States and I also had a little bit of a network there. I had some relatives there so I actually could go there and know some people from the start.
Ian: Yeah, right on. So you clearly must enjoy business then; long hours, long days.
Monte: Yeah, I’ve been working my tail off for a long time, you know, driving sales and being innovative and selling and doing those types of things. Serving customers has been something of a passion of mine, really.
Ian: So, are you a good time manager? Is there a time when you can say, right, I’m shutting the laptop down, that’s it for the day?
Monte: No, that’s my problem, according to my wife. I do not have good balance yet . . .
Ian: There’s always a [inaudible] isn’t it?
Monte: Yeah, yeah. When you start an Internet company, its much different than . . . when I was in the healthcare industry, I chose to work, you know, 16 hour days just be #1 in my game but in the Internet industry, especially when you start your own business, and you serve customers around the world 24 hours a day, you really need to be connected, especially if you’re in control of the ultimate destiny of your company, so even though I have a great staff and a support staff and infrastructure and we’ve grown our business quite a bit, I’m still connected by habit and I like to, you know, try to be as responsive as a CEO as I was when I was just a one man shop.
Ian: Yeah, right on. Okay, lets go back right to the beginning then, domaining then. Where did it all begin for you? What led you to get into domaining and when . . . was there a tipping point where you knew back in the 90’s that, you know, domain names were [inaudible] so it was going to be something really big?
Monte: Yes; it actually happened around the same time I invested in my first domain name. So, as I mentioned, the healthcare industry kind of brought me to the domain business and this is how: I used to sell to directors of pharmacies; big capital equipment and hospital systems when I was younger, in the late 80’s and early 90’s. That was my career. And I used to call on administrators, CEOs and you know, people who were decision-makers. So one of my guys and favorite customers was a director of pharmacy in a big healthcare system in Orlando, Florida. And he had a son that started looking at domain names, you know, back in early ’95 and needed some financial backing for his, you know, his plan on, you know, getting some domain names and . . . because he thought it was a future for, you know, investment and, you know, there was, like, virtual real estate. When I took a look at it, I bought right into that concept right off the bat, literally, by donating and investing thousands and thousands of dollars into registering domain names at the time when they were 70 bucks and then got intricately involved in picking the names, picking the brands and you know, there were still some good names left back then and so . . . But after putting some $70,000 into it out of my pocket, I look at these types of investments as having some kind of rate of return, or else you keep sinking costs into something. You know, at the time there was no traffic monetization; there was no . . . you know, it was brands. And the Internet was just firing up and so we looked at these things as brands and being valuable to someone else and stayed generic in nature and so I created the first vehicle in which to sell domain names on the Internet, created the whole process of selling a domain name and we were literally the first company to ever sell a domain name. Which helped fund the renewal expenses for the business.
Ian: Right.
Monte: So that was in 199 . . . late 1995, early ’96. So I’ve always viewed domain names as virtual properties, as real estate; very similar to real estate in terms of value, appreciation. Those types of things. The only things that are different about it is that, technically, you don’t really own 100% of your domain name. You have the rights to register it and as long as you don’t violate those rights, it will always be yours. But, you know, you can lose it without paying for it and it’s on, you know, subscription-based leases to you and that’s what people need to realize. So it’s unlike real estate, where you own the title; you own the title as long as you're paying for it or you know, under current ICANN laws, you get to use the domain name and resell it.
Ian: I see. Okay. So, late 1990’s; big exciting time. You’re involved in some big domain sales. How on earth, I think everybody would be interested to know, did you ever place any values on some of the stuff, when you had nothing to go on and no precedent to go by?
Monte: Good question. So, so, we didn’t have traffic stats. We didn’t have anything to tell us what a domain name was worth, other than the fact that we spent 70 bucks for it and it was obviously supposed to be worth something more to someone else who desired it, couldn’t buy it in the open market. So we knew it had an appreciation value if it wasn’t available anymore and somebody else inquired interest to buy it. It wasn’t until the first sale, uh . . . we sold a number of domain names between ’96 and 1999, so we started to get an idea of values, so we were basically the only active company selling domain names until AfterNick started . . . just started up in, like, ’98, and so did GreatDomains. I knew Michael Mann from BuyDomains and so we used to correspond a lot because he was doing some of the same things and it was just talking amongst ourselves about what values are and how to . . . there was no evaluation models going on then. But how to put a price tag on a domain name and it was basically based upon interest at the time.
Ian: And I guess it was a moving [inaudible]; it was moving so fast back then that you, you know, one week it was 100 bucks, then week it was a thousand bucks.
Monte: Yeah. And because so much money was being dumped into the industry VCs and investment groups and the Internet was expanding faster than it could really hold in terms of financial investment, it drove up artificially the values of domain names probably at the time. Especially with no metrics behind it. Now the first time that we really became to understand what values were of a domain name was our first million dollar sale, which was the first million dollar sale in the industry, anyway, which was WallStreet.com. We actually had traffic metrics on that domain name and that . . . the traffic metrics on that domain name were between 4,000 and 17,000 unique type-in visitors per day. Now, back then, that’s the equivalent, probably, to a million type-in visitors a day, today. So, that had a lot of value at the time. So, we thought, was that we would be selling this domain name for around $250,000, which people thought we were nuts. And that somebody in the financial sector would be interested in the domain name. So, we took a chance, dumped $20,000, $30,000 out of my pocket personally to help market that and worked with another party who had a nice, you know, one day auction process kind of down, kind of like a one day auction, and allowed people to bid by email, fax, or by telephone; and that was a six round bidding process and at the end of the day, we ended up selling the domain name for $1.03 million to a casino company.
Ian: Right. Exciting times, huh?
Monte: Yeah. And so, that kind of gave us a litmus test on what values of domains were. And after that event happened, you know, a lot of people started flooding in, saying, hey, I want to sell my name for a million dollars, I want to sell my name for a million dollars. And it wasn’t until the Autos.com sale later that year that we really understood the basics around the metrics of evaluating domain names. That was just simple stuff, like, how many letters are in the name; did it have linguistic meaning; was it in the dictionary; was it a .Com, .Net or .Org at the time; did it have brandability, you know; were there any traffic stats, those types of things . . . [inaudible] . . .
Ian: . . . [inaudible] . . . sorry, is this metric still ring true today, does it? Or does [inaudible] . . . .?
Monte: Well, plus another 10 to 12 items now that we measure, such as ALEXA ratings, Google page rank, link popularity, zone file relevance, you know, checking to see if the key terms in the domain name are across the Internet, how many times they’re registered, how many times they’re in use, how many times they’re in use on . . . in different websites. You know, we measure a lot more stuff today that’s a lot more relevant to values and have become pretty accurate in terms of evaluating a domain name and helping guide the market on what true values are.
Ian: Yeah, right on . Okay, after the big boom and sort of minor bust, slight drop, as it were – consolidation is probably a good word . . .
Monte: Yeah, major bust, I would say [laughs].
Ian: Right. And with the industry into the new millennia, being that you were at the forefront, did you ever think that maybe that was it? In terms of fantastic sales from there almost?
Monte: Well, there was definitely questions. Even though they called it the dot com bust, the bust had nothing to do with dot com names, it had to do with companies and the financial investments into those companies that didn’t really have good business acumen or actual a good business plan in place; or that were literally ahead of their time in terms of their delivery of products and services on the Web when credit card processing wasn’t secure or wasn’t as secure; when speeds, baud rate speeds on accessing data, looking at websites, looking at graphics, wasn’t as fast as they are today; when computers were triple or quadruple what they are today in cost; there was really no high speed access back then. Everybody was working off of phone lines. So with those things in place, you know, there were certainly questions whether the Internet was going to survive. However, the most ironic turning point in our industry and in our business was that incident that happened: when the crater happened and the business tanked, the last remaining assets for everybody was actually their domain names.
Ian: Right.
Monte: The e-Toys of the world; the Gardens.com of the world; Mortgage.com; all those properties, they had to get rid of to help satisfy their debt and their bankruptcy trusts claims and there was no one else they could turn to but somebody that had experience in selling domain names, and that was us. And so it was literally those bankruptcy sales of property that kept our business in business.
Ian: Really!
Monte: And, you know, we certainly weeded down employees and went to a skinny crew and kept our nose down but we helped liquidate all those domain names that went out of business or the majority of them and putting valuations on them and helping . . . I was in court five or six times every three or four months giving testimonials on values and bankruptcy hearings, all kinds of stuff on domain names; I was the only person that really understood it. And so it really helped us stay in business.
Ian: Right. Wow. Okay, so, in regards to personal domaining, then you must have snapped up a few precious gems yourself back then – did you?
Monte: Yeah . . . definitely snapped up quite a bit of two-letter domain names in various extensions. Bought names like InternetClassifieds, InternetProperty.com, Trekkie.com, which was, you know, what Star Trek fans called themselves. A lot of domains around our business. Like I bought domains, you know, like DomainSystems, you know, NameSystems, all kinds of domain valuation domain names, you know, all kinds of stuff like that, because I knew our industry was going to be big. So I spent a lot of time buying domain names around the domain industry, and the intellectual real estate and the intellectual property aspect of domains. Also, bought a lot of NIC code type domain names, which is the foundation and infrastructure of IANNA codes and those types of things.
Ian: Yeah. Right. So, how many do you still own today then?
Monte: Oh, I own about a thousand domain names personally. Not a huge portfolio personally. The company then invested, you know, some money into some portfolios as well but we really made a choice to serve customers with portfolios rather than compete with them and try to buy up, you know, portfolios available on the Web and try to compete with them at the drop points. We would rather . . . we felt that it was a conflict of interest at the time and that we should serve customers who do that and not try to compete with them, like, you know, there’s a lot of companies that compete with our customers in that manner; we just don’t do that.
Ian: Yeah, right. So, any regrets?
Monte: Well . . . I mean, I could be back . . .
Ian: Did you think, at the time, you know, I really want that one and [inaudible] really want that . . .
Monte: To be honest, you know, we probably should have bought some portfolios at the time, because, you know, we would have been in a position that, you know, that BuyDomains was in or you know, some of the other big companies that sold out.
Ian: Yeah, really.
Monte: If we would have done what we thought would make us rich instead of what we thought would serve the customer, but you know what? I’m a believer that things happen for a reason and it will all come around and we’re pretty well known in our industry and good things will happen if we continue to do our job and serve our customers; good things will come.
Ian: Great stuff. And so what about selling your stock? Do you actually personally sell any domains?
Monte: Uhm, yeah, yeah. I personally sell domains when the offer’s right. I’m not a believer . . .
Ian: [inaudible] . . . or do you market them?
Monte: I’m not a believer . . . I don’t go out really and market my own domain names personally. If people express interest in my own domain names, then I’ll respond to them with what I know to be the values today. And I preach to my customers also, those that buy domain names or are just holding, holding, holding I don’t think is a great idea. As we’ve learned in the past two or three times, that industry can change, the market can change, things can change, people need money at different times. You should always be diversifying. I think that this domain business is a great investment opportunity; I think there’s a lot of appreciation value long term and short term. But simple changes, just dramatic changes in the way Google does monetization or changes in ICANN rules and laws, changes in prices of domain names, can really change the dynamics of ROI . . .
Ian: Right on.
Monte: . . . in our industry, so I’m a big believer and I preach to take money off the table and then if you want to reinvest it into the business, that’s fine. But always take money off the table, pay your nut, you know, pay your renewal fees, pay your infrastructure costs. That way you’re budget neutral and then you’re using profits to generate more money into your business and more investment, instead of being always behind the curve or you know, behind the 8-ball in terms of dumping money and money and money into it. I mean, back in ’96, at the end of 1996 and I had 70 grand into the business already, I was like, okay, now somehow I’ve got to find a way to get this money back. So, you know, liquidating 10 or 12, you know, 10 to 20 names, I think it was at the time got that money back.
Ian: Yeah, absolutely.
Monte: So then I knew I could get the money back, you know. So that gave me some security.
Ian: Right. Okay. And so, personally, investing, do you ever get involved – is it just .Com or do you do anything else? ccTLDs?
Monte: Well, I’m not personally buying domain names, anymore. I haven’t for quite some time. The company is consulted a lot, you know, Moniker is consulted a lot as a domain asset management company with their clients and we consult . . . you know, I’m, of course, a big believer that the .Coms hold their value, just like, you know, beachfront real estate will always hold its value. But, there’s some simple facts in our business that give light to other extensions and other types of domain names also appreciating in value over time. And that is that there’s two million new Internet users on every three weeks, I think it is, is the state. They’re all looking for identities and all the .Coms generally are gone. So there’s other extensions that they’re registering, which will become valuable brands at some point, or pre-registered domain names are always more valuable than names that are just coming out that haven’t been registered yet. So if somebody else saw value in a domain name prior to you, it automatically carries some inherent value, ‘cause somebody else thought it was valuable, right?
Ian: Right on; yeah.
Monte: So, so, uhm, .Info has some good appreciation value, in my opinion. You know, land rushes create value because its supply and demand metrics, so even .Eu, which I . . . I’m not sure how its going to be used in the future . . . has value because at land rush, everybody went crazy trying to get the names.
Ian: Yeah, right.
Monte: .Mobi I think has a lot of potential because it has a special application to make your PDA and your mobile device present content in a manner that nothing else can unless your on a WAP network. So I do believe that there are other extensions that have value. We sold Sex.net for $450,000 at the last live auction; so .Net has value. There’s more .Net names on DNS servers than there are .Com names. You know, so there’s, you know, there are inherent things that say that some of these extensions are going to be valuable in the future for sure, due to supply and demand, the amount of people that are getting on the Web; the fact that computers and high speed Internet access is cheap; doing websites are template-based now and easy to do; people are starting businesses out their homes and garages like never before; my 4-year-old is using computers in their classrooms so the industry has a lot of legs to it.
Ian: Absolutely, yeah. Which moves us nicely and smoothly on to my next question. So, apart from NamePros is listening to us and use the industry and investing some dollars into domains and developing – what do you think they should do? Is it too late now? Or is there still money to be made entering the industry today?
Monte: No, there’s not . . . it’s not too late at all. There’s a lot of talk about the tail – looking at names that have multiple terms, multiple words, phrases; I think those are going to be very valuable in the future. The reason is because single word domain names . . . to be honest with you that a name like “HobokenNewJerseyAutoSales” can have more commercial value in some ways than Autos.com does, because its very targeted and focused around a particular geo-targeted market and industry. And so . . .
Ian: Do you think people are going to be speaking into their computers and they’re more likely to say a phrase rather than a single word in the future?
Monte: Exactly. And they all know that search is going local. Search is going local and what’s happening in type-in search queries are happening in domain names as well. There’s more and more type in traffic in geographical long domain names than there were ever before, so therefore they’re correlating and corresponding to each other. The longer, more targeted search phrases are turning into domain names. So that means there’s definitely availability in the tail. Like longer words, multi-phrases in other extensions, you know, .De, .Co.Uk are, you know, the second and third most registered domain names now, in extensions, so they’re now beating .Net and .Org. So I do think there’s great opportunity. And I also think it’s a great time to buy in the aftermarket. Even though some prices look to be inflated, you will look back 10 years from now and thank God that you bought a name for 10 times what you think the value is today because it’ll be worth 10 times more in the future.
Ian: Alright. Okay [inaudible] . . .
Monte: So the aftermarket, it is going to catch fire like crazy . . .
Ian: Really.
Monte: The live auctions that we’re doing, its very apparent that people are spending money and there’s a market deciding the values of domain names in an open room. You know, the last live auction that we did was . . . we sold $2.1 million worth of domain names in 3 hours – 58 names changed hands . . .
Ian: Wow.
Monte: And this auction that’s coming up in October at the TRAFFIC conference, we’re planning on selling north of $5 million worth of domain names . . .
Ian: Jeepers.
Monte: Those types of events actually help the entire industry because it sets values; it indicates interest; and it tells the market, the outside market, that it is a viable transaction-based market where they can make investment into and so more money will flow into it.
Ian: Right. Okay, so, say with the smaller domainer, for instance, if you put your feet in their shoes for the moment, how would you (I’m putting you on the spot a little bit here), if you had a few hundred bucks right, what would you spend it on?
Monte: You mean, just in general?
Ian: No; in domains.
Monte: Oh, in domains.
Ian: [laughs] No, not, you know, buy yourself a new bike or something [laughs].
Monte: Uhm; I’m a big proponent of looking at future applications and stuff. Back in 2001 and 2000, I had customers registering the hell out of nano-technology names and no one knew what they were doing and now its become very valuable, so you know, for a couple hundred bucks, you could probably register newly registered domain names or pick up some domain name on the drop for $60, you know, through SnapNames or something and get some decent names that were previously registered that have some future value. But also being careful not to cyber-squat. You know, don’t go after famous brands, because that is something that’s going to change like crazy, is that the famous marks, as just demonstrated by Microsoft very hard in the future about typo-squatting and cyber-squatting their brands. But future generic application names; things that are in the future. Things around maybe our energy crisis and the fact that oil prices are so high and alternative uses of fuel and energy, those types of things. That’s what I would be investing in.
Ian: Okay. So, just moving in quickly on Moniker. What can Moniker do to help the average name processor?
Monte: Well, uh, Moniker is much different than any other, I would think, domain company that’s out there. Although most people know us as an ICANN-accredited registrar, we’re really a domain asset management company. We manage very large portfolios, you know, small, medium and large portfolios for customers and we try to help those particular portfolios appreciate in value and monetize in every way that we can. So, our complementary services, such as just registering, securing and keeping safe, a domain name or an Internet asset that you register, then comes monetizing, selling, appraising, escrow services, forwarding, all those types of uses of domain names which increase its value like crazy. So through TrafficClub.com, we monetize parked domain traffic. We’re going to be adding many things on there for people that want to do some development or add some content to those particular parked domain names and mix in parked domain names and tie into affiliate programs and doing things like that, so that names increase in value. Once they increase in value from use like that, even from the very basic use of parking, they establish what’s called a foundation value, and then they become a more valuable asset than doing nothing and then the multiples are higher if there’s ever time to resell it. And so, also, being positioned for live and silent auction. We’re the only company doing live domain auctions and we basically own the franchise to do live domain auctions for the TRAFFIC conference for the next two years. So all live auctions will be handled through Moniker and so will all the appraisals and so will all the monetization of those domain names while they’re up for auctions and all that stuff which customers will benefit greatly from. So, our whole focus is around, you know, domain asset management. We also do a lot of portfolio management for corporations; we manage the Major League Baseball, National Hockey League, Lion’s Gate Films, companies like that. So we manage all their Internet assets and you know, we do a lot of stuff: acquisitions for customers for individuals and companies, so if somebody’s looking for a brand and they don’t want them to know who’s on the other end of that, we go out and get it for them and use, you know, special techniques to be able to do that, and at least help them secure a brand and do a fair transaction with the seller and then give the domain name that they’re really desiring for the buyer and help in the middle of that transaction as well.
Ian: Right. So this is like Moniker Domain Systems stays at the forefront of the industry, huh?
Monte: Yes. I mean, I believe so. We’re not a GoDaddy who . . . who goes after individual domain customer and tries to get them to build a website and you know, build an individual brand. We go after people that view the domain names of assets like we always have. That is somebody that usually has more than one; that uses them to make money, or will use them to make money in some way; that bought them or invested in them because they believe that they will appreciate and increase in value; and yes, they can build brands and do their websites with us as well, but the majority of our customers are big portfolio owners, people that keep looking for opportunities, people that want to see their portfolio grow in value, people that want to verify that it’s a future investment of value to them. And so that’s the customer that we go after. That’s why MarchX and you know, those big corporations that I mentioned to you and the largest domainers in the world, actually, have their portfolios with us, because they . . . because we have the same kind of alignment. We’re aligned with our customers because we believe in the same things.
Ian: Is there any desire to be the #1 in terms of number of domains registered?
Monte: I think it would be nice to be #1, just because of sheer volume. Our retention rates are extremely high; as a matter of fact, they’re the highest in the registrar business. We’re at 95% retention rates. That means that our customer renews their domain names and doesn’t let them drop or leave the system 95% of the time. They keep their names with us and they always renew. So I believe that our lifetime value of a customer, even at NamePro discount rates of, you know, $6.95-$7.00 a domain name, we have a more valuable customer than a GoDaddy does, because GoDaddy has . . . you know, churns their inventory 35% of the time a year, so they have 65% hold rate; and we have a 90% to 95% hold rate. So my customer’s likely to renew their domain name year after year and so that little tiny margin that I get makes up for giving people good pricing and then I build a relationship and a special relationship with my customers because I help them grow their portfolio in value and then I’m more likely to offer them other products and services which they’ll use from me and that way I can get more money into the system and then help the customer out at the same time.
Ian: Right.
Monte: And so, I’m not necessarily desiring to be the #1 registrar. I am desiring and have established, I think, that we are the #1 asset management company for domain names and definitely are one of the few people that get it; you know, one of the few companies that get it. And has gotten it for a long time and as soon as the rest of the domain community understands that we get it, then we’ll just come, because we’re doing the right thing.
Ian: Right on. So what about . . . you mentioned some really large portfolio owners there – in terms of . . . I won’t ask who or why or when, but in terms of domains, what’s the largest customer own? I think people would be interested to know.
Monte: Well, I mean, we have four that are really big . . .
Ian: [inaudible] . . . who but . . .
Monte: Well, you know, I can mention who, you know, for the most part. There’s four or five major customers that everybody knows. I mean, MarchX, of course, which the whole $164 million transaction when they bought the UltimateSearch inventory happened under our watch, happened at Moniker. We did the change of ownership, helped with the change of ownership and the deal. So that was the largest transaction that every occurred in our industry thus far in terms of a domain portfolio purchase.
Ian: Right.
Monte: Uhm, FMA, uh, Liqua or Funium, has all his names here. Mainstream Advertising has all their names here. KnockInternet, from Turkey, they have all their names here. You know, these are all people that have over 100,000 domain names here. You know, there’s lots of domainers that have, you know, tens of thousands, you know, thousands; our average domainer owns about 100 domain names a piece, you know, a person. So, again, its portfolio based. People see value in their portfolios and they have a lot of names with us. All of our systems, our tools, we have a category manager in our Moniker registrar – all these things are designed for large portfolio holders, so change of ownership and change of contact information and DNS changes and all that stuff is relatively built for speed and efficiency for large portfolios here.
Ian: Wow. Just talking quickly about domain name forums. You obviously have been a member of NamePros since pretty much the start of it and . . .
Monte: Yes, yes.
Ian: You visit a lot of the forums or do you visit NamePros very often? Are you surprised at the growth that NamePros has had since its inception being, I think, the largest now?
Monte: Yeah. I think that forums are great. It’s a chance for domainers to build a community with each other and share best practices and share good experiences and things to be warned of and you know, obviously, sometimes, there’s lots of rant pages on the forums, if somebody does something wrong and doesn’t own up to their mistakes and you know, we’ve had some of those mistakes happen and you just have to take responsibility in a forum, because things can spread like a disease. But I make it a special point to participate in the forums myself as a CEO of my organization, as my company. I’m probably one of the few guys that I can see that do that, you know, in a CEO role. Now all my staff are trained to do that as well, because we believe that the best way to grow business on the Internet is to be . . . to have a relationship with our customers, so through the forums, through the on . . . through the shows, you know, we’re the only registrar that has a booth at SES, at Webmaster World, at the TRAFFIC Conference, at all these different niches in our Internet business because we believe that by touching the customer, touching the community, touching the industry in various ways, we can learn more that we can pass down to our customers . . .
Ian: Right.
Monte: You know, we get more educated about what people want, what they need, what the industry’s doing, the new techniques in search, the new things that are happening with PPC. We’re the only ones there, so I’m learning things before everyone else is, I think. And I’m sharing that stuff and commenting on it at the forums. I’m not as active on the forums as I used to be because I’m just busy – I’m a lot busier but I do try to visit all the forums twice a week to make sure that our name is being spoken about in a positive way and that if there’s any problems, and people are having problems or if we had an outage or something and that we’re jumping on it. I’m pretty responsive on the forums myself and so is my staff.
Ian: You mention your team there at Moniker; how many . . . can you give the guys, the people that are listening, some idea of the guys that are working for you, the background, how many staff have you got, where’s your business located, etc.?
Monte: We’re in Pompano Beach, Florida. That’s where our office is, is in Pompano Beach, Florida. We have two database networks, you know, infrastructure networks where our servers are sitting – one’s at RackSpace in San Antonio, Texas and the other one’s in Buffalo, New York. And so we have redundancy and complete back up redundancy back and forth between mirrored servers between those two locations so that if one side of the network gets cut, we’re up and running on the other side of the network pretty quickly. So we don’t house infrastructure here in the hurricane zone, that’s for sure. I have about 20 people here; we’re growing to 26 by the end of the year. We operate a 24 hour operation. We have 5 people in sales . . .
Ian: Just in the U.S. or are you in other countries, or . . .?
Monte: We’re located here in the U.S., but we serve, obviously, as a domain company, we serve tons of International clients from all over the world and we also have . . . we speak, you know, between my staff, they speak four or five different languages here, so we handle, you know, different needs and requirements for those particular International clients, as well. So we’re here and we’re growing; just expanded our office space here in South Florida and we have development and customer service, which we’re known for and you know, my partner and I, Eric Harrington and I, you know, started Moniker/ . . . you know, started DomainSystems back in 1999 . . .
Ian: Right.
Monte: And so we’ve been here ever since.
Ian: Okay, now, talk about the industry, if you don’t mind me just quickly moving along. We spoke before when we were talking about the WADND, and also the DNOA which is at NamePros , , , uhm, perhaps some people that don’t know what that entails. Perhaps you’d like to tell everybody a little bit about the WADND and how you’re involved.
Monte: Okay, well, WADND, which sounds like a funny name but WADND is the World Association of Domain Name Developers; it was started by the original core group that started TRAFFIC, which was Rick Schwartz and Howard Neu and the people that started gathering – I’m not saying that they’re any more important than anyone else in the industry but they made an attempt to have a group of people get together to discuss the industry and have seminars around how people can learn from the experts and those types of things and started the first, you know, basically domain conference, you know, several years ago, which wasn’t really called anything at the time. Now it’s called TRAFFIC. WADND is a result of this group getting together to try to establish an ethics of business people and the consumer, the domainer on the other side, of how we should conduct business with each other. And try to lay down some rules and some laws and some regulations and some . . . you know, have a board and have it formalized and professionalized in some way, because it’s kind of like the Wild West if it doesn’t have some kind of formality to it. So being part of that group and now I’m on the board of that group, we’ve established a, you know, a code of ethics and a way to do business with each other and if somebody’s a crook and hijacking, you know, they’re blackballed and you just don’t do business with those people and you basically, really need to know who you’re doing business with. We live in a virtual world, you know, we’re doing business with each other virtually and you have to make it a point to get together and really get to know who you’re exchanging dollars with and how you’re conducting business because if this is truly going to be an industry that’s going to be around for our kids and our children’s children and we’re going to feed thousands and thousands of families, it needs to have some establishment, some solid foundation and some growth opportunity, so that the outside investment world keeps funneling or begins to funnel major investment into the business, just like they did in the very early stages of the Internet itself.
Ian: Right. [inaudible] . . .
Monte: And . . . what’s that?
Ian: Anybody can join WADND or is this for companies or individuals or . . .?
Monte: Uhm, well . . . WADND is the one . . . I suggest that anyone who’s interested in getting involved in this attend the TRAFFIC conference, because that’s why WADND puts on this TRAFFIC and anybody can join WADND and WADND has a board. So if you go to TargetedTraffic.com, you can join up and go to the conference and get a part . . . be a part of the community and basically what happens is its kind of an invite, once you apply, its an invite-only type scenario at first, because, your name and your application gets thrown around to everybody to make sure that nobody’s had any, you know, bad experiences and of course, people speak up if they’ve had good experiences and then everybody votes everybody in. So if you think about a network, a core network of businessmen or how things should really start off, like with your friends, like you trust your friends, like, hopefully, people that are really close to you, you trust, right? If you get to know them and they get to know you and that network expands and it expands and it expands, you’ve built a foundation of people like you know that you can do business or people through other people you can recommend to do business with. So its kind of like a big networking opportunity. Like, if somebody refers you to that other person or that other company, you can count on the fact that they will do you right . . .
Ian: Right.
Monte: . . . when you’re unsure, because you’re doing things virtually. That’s what the whole point of this organization is.
Ian: Okay. When we spoke before, we briefly discussed the recent launch of the Domain Name Owners Association at NamePros. Do you think there’s a space for such an organization? And being you, what do you think the DNOA should perhaps hold as its principles?
Monte: Well, uhm, you know, the code of ethics of any business is what’s important and that is how you conduct business with each other. You know, the Domain Name Owners Association, there’s a lot of little associations starting up with each other and they should all work with each other also, just like there’s multiple organizations in many industries.
Ian: Right.
Monte: And they all should be talking to each other, because you want to carry a couple key foundation things that we all do together. And then of course, if there’s specialty groups and associations that are, you know, geared towards certain niches or certain opportunities or whatever, then they of course will have their own sub-you know, ethics and strategies to do business with. But I think its all good; it’s all about establishing, you know, if you have to do a background check, you know, just like if you were to be loaned money by someone, you’d do a background check, you’d make sure that someone’s credit-worth, hopefully. Those are the types of things, only into the domain industry that a core foundation organization like DNA, like WADND, should be doing is to make sure that the people that are a part of it are reliable, ethical, have a good reputation, are contributing something positive to the industry so that it continues to grow and be vibrant and have good opportunity and good ideas and creativity and those types of things. That’s what attracts people to it and if you do that and you do it right than you have a good foundation and a good organization that carries you forward and will have many, many members to it.
Ian: Thanks. And what would you that WADND and DNOA will actually improve the reputation of domain owners to the main industry?
Monte: Sure. Sure. I mean, there’s a lot of stuff going on in a merging market like the domain name market is. There’s a lot people trying to take advantage of the loopholes and the gray areas, the areas and the laws and the rules that haven’t been established yet. And so, the only things that you can look to are some organized structure, you know, structures of people or businesses or networks of those types of groups to at least establish a foundation to help you defend things that are bad, give a forum to defend the industry when the industry gets a bad rap for something that one person did (like a domain theft or you know, a cyber-squatting case or you know, taking advantage of click fraud or whatever comes out in the future), that core group of people that are doing business together that have the good positive side and the ethics that could beat anything that can have a negative to the business.
Ian: Yeah, absolutely. Okay . . .
Monte: Because in their early stages in an industry, those are the most important things that keep the industry alive, right?
Ian: Absolutely.
Monte: If we don’t have outside investment opportunity, uhm, if people from the outside – the Millbank-Roy's and the RBC's of the world that are now investing heavily in the domain business, you know, Highland Capital and Summit, Venture Partners and Insight, because the companies affect us, you know, if they don’t see that its an established foundation and established industry, they’re not going to put their money in it.
Ian: Right.
Monte: And if they’re not going to put their money in it, then all of a sudden all you have is a bunch of people doing transactions between yourselves but there’s no outside investment, it doesn’t appreciate in value.
Ian: Yeah, that’s right. Absolutely. Uhm, right. Just moving quickly along; I think we’ve run out of time, that is. Let’s talk quickly about the .Eu land rush. Bob Parsons of GoDaddy was very vocal in his blog regarding the dismay of [inaudible] registrars and what they were able to get away with. So, without naming names, what was your take on the .Eu land rush? How did Moniker fair? And how well do you think it was handled by the central registry?
Monte: Well, the central EU registry, I thought it was handled horribly. I was one of the critics of the whole .Eu land rush myself and the way the .Eu was handled, basically the whole launch of their extension. It was extremely unorganized, completely, the test environment . . . you know, just speaking as a registrar that had a number of threads onto the land rush to help our customers acquire domain names, not for ourselves but only for customers . . .
Ian: Right, right.
Monte: Uhm, the things that worked in beta and worked on their test servers didn’t work in the live environment, so quite frankly, we were shut out for the first, well, thirty to forty-five minutes, even though the whole DNS round robin, grabbing approach worked in test, it didn’t work on their main server environment, so many, many registrars were shut out. I think GoDaddy was shut out of the whole thing, too. As a matter of fact, I don’t think they even got turned on. So, Bob was pissed, you know, he was upset. We were upset also. Luckily, we got on at the middle of the whole land rush and at least acquired, I think, a couple thousand, when it was all said and done, names for our customers but I thought it was handled poorly, it was unorganized. I think that the organization itself, the folks that are making the decisions over there are not being conscious about what’s going on around the world and the other communities. It is European privileges . . . privileges seem to be going to the European market and the European registrars, rather than the ICANN registrar community, so . . .
Ian: [inaudible] . . . or do you think there was something afoot there, because, I mean, that just seems to be the case, to anybody . . . [inaudible] . . .
Monte: Well, they are [inaudible] . . .
Ian: . . . and somewhere in Central Europe got everything they looked for and then the big boys [inaudible] . . .
Ian: Yeah, yeah, yeah . . .
Monte: [inaudible] . . . the rules . . .
Ian: 375 EU accredited registrars that were added in the last week than there were prior to the week of land rush and 375 registrars added at the last minute that EU accredited but not ICANN accredited was really fishy to me. I mean, when you pass ICANN accreditation, you basically pass any kind of accreditation. The EU accredited registrars which actually later on turned out to be a big lawsuit and they’re still fighting all that but you know, 75,000 names had to be given back up into the system, so if you look at that and look at what happened in that land rush and what happened in the aftermath of it, it was a debacle.
Ian: Right.
Monte: It’s a shame, because a lot of people got screwed and , , ,
Ian: I see a lot of NamePros members nodding their heads, listening to your words, I think.
Monte: Yeah, it was a horrible . . . it was a horrible launch, you know. I look forward to what .Mobi’s going to do. I think it’s going to be . . . because Affilias is behind it, behind the backbone of their registrar. It’s going to be organized, its going to be legit. Everybody’s going to get an equal chance. There’s not going to be any favoritism played. You’re going to be able to communicate and contact their customer support 24 hours a day. The .Eu registrar shut off, you know, at 4:00 o’clock in the afternoon and didn’t open up until the next day and the hours didn’t even match up to where the majority of the domain name owners are, which was here.
Ian: Absolutely, yeah.
Monte: Yeah. So it was a hard . . . it was a hard launch, I think.
Ian: Okay. Alright. So, just to cap off this enthralling interview (I have to say) – what do you think is coming up in the industry? Conferences, you think, are a must for serious NamePros domainer? And talking of conferences, you mentioned TRAFFIC. If you had to visit just one conference a year, would it that or . . . ?
Monte: Yeah, it would be . . . if there was one conference a year, I’d visit TRAFFIC but I’m a big . . .
Ian: I think that’d be a good time to sort of tell when TRAFFIC is, actually, save people some [inaudible] . . .
Monte: Well, TRAFFIC . . . the next TRAFFIC Conference is October 24th through the 28th, in Miami, Florida, actually. You can go to TargetedTraffic.com and then you can apply for a membership or application right there and if approved, you can go to the conference. They have . . . the TRAFFIC Conference happens two to three times a year. They usually do a East Coast show; the West Coast show is in Las Vegas, generally and then there’d be a middle show that they’re going to be bouncing around. I understand that we’re considering London and Europe in mid . . . sometime in February 2007 . . .
Ian: Lovely in London in February.
Monte: Yeah [laughs]. Is that sarcastic?
Ian: Yes.
Monte: Well, whatever it is. But to tap into the European market because there’s a lot of Europeans that have to fly into TRAFFIC; there’s a lot of European members of TRAFFIC. In order to get closer to them, we feel it needs to be somewhere over and across the pond, as you would say, to go over there; and you know, possibly Asia one day. But . . . and also Australia, we’re planning as well, in the future, because there’s a lot of Australian domainers. So if you had to go to one conference, I would to those. The networking value of that conference, it’s worth every penny that you pay in admission. You meet people that you’ve been emailing and foruming each other for years and you finally get to meet the people that you trust and that you’ve been corresponding with that you think are your friends and pals and then when you get there, after a few beers and stuff., you are.
Ian: Yeah, right.
Monte: It’s no doubt. And then you get, of course, to meet companies like me and mine and the people that run those companies, so you understand who to do business with; it’s the guys at DomainSponsor and us and NameMedia, you know, the new ENOM conglomerate and you know, we’re all there. And so the people that really believe in the industry and are the foundation of the industry are at these conferences supporting it. The other conferences, though, if you’re looking to develop and you know, start to develop content on your website and start to branch out into different avenues, my recommendation to every domainer is not to just sit on domain names and not do anything with them or just 100% park them. You should be spreading your portfolio around different avenues like some affiliate group, some affiliate sites and then also micro-sites and development. If you’re going to go do that, you go to the Affiliate Summit, which is held a couple times a year, once in Vegas; this time it was in Orlando over the summer. SES conferences and WebmasterWorld conferences are extremely valuable. They’re search engine optimization-based and also affiliate based but there’s a lot of very talented, smart, you know, original starters of the Internet that are all part of these organizations that attend these conferences and learn what’s on the cutting edge, try to find out what Google and Yahoo! are doing on search. And Google and Yahoo! are there and they share secrets that they don’t share anywhere else and you know, those types of things. Those are conferences that everybody should be going to for sure. Then of course, we’re trying to go to AdTech. We’re starting to go to some really good niche conferences, like in the gaming space. You know, the dating space. There’s all kinds of great opportunities if you have those particular domain names, you’ve got to go to those conferences. You learn a lot more from attending some of those seminars and meeting some of the people in those organizations than you do just, you know, being in the forum.
Ian: Absolutely. Okay, just to finish up then. One person in the industry – mentioning someone you respect and is worth being singled out – is there anybody such?
Monte: Oh, I think there’s a few people. I mean, if I could mention a couple people . . .
Ian: Yeah, for sure.
Monte: You know, a forward thinking company that’s in the space is MarchX, for sure. They were the first one to really [inaudible] and buy a complete portfolio and take a net . . . basically, take a casting net and throw it across a . . . what as once considered one of the premium portfolios in the industry and basically get a good head start upon their competition on getting into the domain business. They’re a true believer of direct navigation and they’ve able to monetize that portfolio much better than they ever thought when they first bought it.
Ian: Okay.
Monte: I do believe that people like (although controversial) Rick Schwartz is somebody that should be looked upon as a pioneer in this industry and although he is . . .
Ian: It says that on his forum, apparently.
Monte: What’s that?
Ian: It says that on his forum, apparently.
Monte: Yeah, yeah. I mean, you know, he’s had a domain forum before anybody did.
Ian: Absolutely, yeah.
Monte: So, you know, he [inaudible] forum in the mid-90’s and you know, it’s grown quite a bit and TargetedTrafficForum is the forum and it’s an invite-only forum and that’s part of the TRAFFIC conference group. But, he is a forward thinker. He has a unique way of understanding what the future of domains are and has done a very good putting together, and him along with Howard Neu, organizing the TRAFFIC group.
Ian: Right.
Monte: I also have a high degree of respect for folks like DeLiqua and Funnian and Ron Jackson, who’s basically the only media source in our industry that reports the media events fairly and tries to establish as many things as possible to give the industry a lot of value and credibility and of course, all the guys that started the forums and you know, that run legitimate businesses and . . . those are all people that, you know, I hold a great deal of respect for and try to work with. You know, and including my competitors, too, you know. The competitors in this business, you know, the Fabulous’ in the world, the Enoms and those folks are definitely knowledgeable about domains and BuyDomains Group, Michael Mann, who started BuyDomains is somebody that I have a great deal of respect for as well. And he’s still involved in the domain community and has started Grassroots.org and been doing some great things for the charitable organizations and he’s putting his money back into the community and it’s a really, you know, really respectful and really great thing for him, the things that he’s doing there.
Ian: Brilliant stuff. Okay. Final question: If anyone in Hollywood made of film about your life, who’s playing the lead role?
Monte: Ha! [laughs]. Me! [laughs]
Ian: Yeah.
Monte: [laughs]
Ian: Maybe an aging Tom Cruise? [laughs]
Monte: Who’s playing the lead role? I don’t know. I don’t know. I don’t think I’m worthy of a Hollywood movie, that’s for sure, but, you know, I just hope that my . . . my . . . that our contribution as a company and that my staff and my team who just like totally into their jobs and into serving their customers, you know, we have a unique . . . we have a unique . . . I think we have a unique approach as a business here in the Internet community, because we operate more like a brick and mortar, uhm, shop, in an Internet-based, virtual world because we go out and try to touch everybody. You know, we go and travel to all the shows and we’re at the events and we’re at the conferences and we’re online, you know, the majority of the time, you know. Most hours of the day; I am, certainly. I think that, you know, if anything that we can leave our mark on that’s helping to make sure that the foundation of our industry is solid and sound so that other people can get into it and have success in it and build upon their future and their investment and look to the future in terms of building their portfolio, and that outside companies and investment institutions see that it’s a legitimate place to do business and put their money, so that we can feed families and my children can work in the business; and we’ve established a new economy here. And so I hope that we have some kind of contribution for that, when its all said and done.
Ian: Monte, once again, its been a tremendous pleasure speaking with you today for NamePros radio and I thank you for your time. Wish you and your family a wonderful weekend.
Monte: Thank you, Ian, and I appreciate the opportunity and for all the NamePros members, we really appreciate your support and your confidence in our ability to serve you and please give us feedback whenever we’re doing something right and doing something wrong and we’ll definitely be there to support you.
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