Today was an interesting day. I had a doctor's appointment in the afternoon, I was trying to schedule a time to meet with another business partner on an Amazon FBA project and somewhere between the two, a domain auction was ending for a domain that I had been following for awhile. By awhile, I mean since 2012, when I first stumbled across a premium keyword domain with no website to speak of. So yes, for three years I've been following this domain trying to figure out how to pick it up. And today, I finally did!
Like most good stories, this one starts earlier today in my living room, with coffee and chatting with Mike on Skype about the implosion of the stock market today, stop hunting HFT bots and of course, the daily hustle.
1:53:53 PM] Grant: xxxxxxxxxxx.com. know you're not interested. how much do you think it's worth wholesale?
Mike: retail is 200k-300k
Mike: I’d pay 30k for it in a heartbeat, but it’s not a domain I want nor have money for
Mike: but 30k would be stealing it
Grant: i'm the high bidder at 6.7k right now
Grant: with 1 minute to go
Mike: Wait what?
Mike: jesus fucking christ
This is one of the best parts about having a business partner, especially someone like Mike, who is well respected in the domain world. For those new to EcomCrew, Mike has a history of snagging very valuable domains such Treadmill.com and WebsiteHosting.com and then flipping them for a cool $225,000 in a matter of months. I've also seen him take about $10,000 from the Bellagio in a single setting that will go down in infamy, but that's another story all together. Point is, Mike tends to know his shit and he garners my respect.
So, being able to bounce ideas back and forth with another like minded person is a huge advantage that most entrepreneurs don't have access to. Sometimes Mike and I think a little too closely, which is good and bad, because it can lead to the echo chamber effect where we only want to hear what we want to. But, we disagree often enough that it's a good check and balance. In this case, I was happy to see that we both had around the same valuation for the domain in question and that I was priming myself for a good'ole auction battle if necessary. For anyone that knows me personally, while I am incredibly laid back for the most part, when you put money and competition in the same room together, all bets are off :)
Speaking of auction battle (story time, feel free to skip ahead past this paragraph), Mike had an epic story of a Flippa auction that went on 3 entire days. With Flippa, if anyone is outbid, it extends the auction along for another additional hour, as a way of giving all parties more time to ponder and make a bid. Good for Flippa, bad for a fast auction format. Unfortunately for Mike, the other guy decided that instead of just bidding it all out and letting price discovery work, that they would wait until the very last minute and outbid Mike… by a dollar. The funny part is that while Mike can also be laid back, anything that involves making Mike wait makes him go absolutely bat shit crazy. I'm laughing out loud just thinking about Mike falling over in his chair being outbid by a dollar at 4am at night for three nights in a row.
In fact, Mike got so infuriated with the process of going head-to-head in an endurance race with the other bidder that he went straight Mission Impossible and Googled the competing bidder's username, did a bunch of deep searching and finally found the other bidder's contact information! You would think Mike called the guy up to go off the handle, but instead, had a civil and frank talk on trying not to waste each others' money and time any longer and deciding what each side was honestly willing to go up to. In the end, the other guy agreed that he wasn't as committed and let Mike win the auction.
Now, that story segues into my own, as this domain that I won today was actually a project three years in the making, around the time I picked up CuttingBoard.com. I know you're all chomping at the bit to know which domain it is, but I'm holding off until the end of the post so that it's not a distraction. For now, I'm going to call it Domain X.
I know… I'm being a tease
I found Domain X simply by randomly punching in keyword domains into my browser and taking a look at what was there. The majority of the time, keyword domains are owned by other domainers and you'll almost never get a good deal because domainers generally have an idea of a fair market value for a domain. If anything, big domainers often aren't even interested in selling while small domainers are looking for their lotto ticket, so it's just a complete waste of air communicating. Most everyone is trying to find The Greater Fool in the domain industry, so it's hard to do business under those conditions.
What set Domain X apart from the rest is that it used to have a site that existed, but it didn't anymore. You can always use archive.org and the Wayback Machine to take a look at how a website used to look many years ago. It's an invaluable tool, because it gives you an idea of the history of the site, what happened and most importantly, a sense of who is the owner or operator. In Domain X's case, it looked like a failed business that went out a number of years ago and the domain was simply on auto-renew. As an entrepreneur, admitting defeat is the hardest thing a business owner can do, so holding onto the domain or email is really the last hope of keeping that dream alive. There exists many online business have failed this way and even more didn't even have any plans for the domain after the fact. It's literally a digital version of not having someone left to turn off the lights when the business shuts down. In fact, there's even an auction going on as we speak for Iomega.com (Zip Drives, anyone?)
Knowing that this was likely a shuttered business, I wanted to be tactful when contacting the owner of Domain X, so I tried email at first. Unfortunately, all the emails bounced, so I went to the phones. That wasn't helpful either, as the number was disconnected. That doesn't quite stop me, as I know most domain owners don't own a single domain, so I looked up any other domains that the owner possibly could have owned to see if they have any other more current registrations. Unfortunately, I drew a blank there as well, even after cross referencing all sorts of email, phone and address data. I realized I was going to have to get serious.
The next step was to order a domain history, which you can get at a number of providers, but I personally like domaintools.com. This is like pulling a title history, so I was able to grab the entire history of address changes, phone numbers and owner names. This provided me with a lot more actionable information, as I now had 3 phone numbers to go on, another owner name and the address was the same throughout. I first tried all three numbers, but to no avail. Two were non-functional, one had no idea of the business. With the two owner names and address, I decided that I would go through the State of California corporation records and get some more information. Bingo! I managed to find business licenses up from the mid 1980s through 2011, when the business was finally shuttered. Address match, name match and phone match, so I had the right guy, but no way of getting in touch.
Most domainers would have given up a long time ago, but this is where I tend to just get started. Now, so you know, this is a domain that I'm not crazy about, but I feel like I can offer the owner a price that he and I would both be happy with. I just have to get him on the phone first.. and I know no other domainer is making this effort, so the competition is zero.
Armed with my information on knowing the owner's exact name, I then pulled person search for the city. Unfortunately, that city was LOS ANGELES, so even with a fairly unique name, I ended up with about 40 matches for the greater LA area. So what did I do? Yeah, that's right, I called every number on that list.
“Hello, good afternoon, my name is Grant and I'm calling from Seattle. Is Mr. XXXXXXX available?”
(No) “Ok, maybe you can assist me, as I'm not sure if my records are correct. Are you familiar with his business in the clothing industry?”
(Yes / Hand Off) “Hi Mr XXXXX. My name is Grant and first off, I want to make sure I'm talking to the right person as I'm going off some old records, but are you the owner of XXXXX business?”
… and so on, 40 times over. Out of that 40, I had about 10 answer in the affirmative and saying they had no idea what I was talking about. Another 15-20 were incorrect or out of date numbers. The last 10 were a combination of not wanting to talk to me or simply no one ever answered or got back to me. On one particular call however, my old poker skills picked up some hesitation on the line when I asked for the owner and based on the address and proximity to the corporate location, I felt like there was something there. I had a lot of questions regarding why I was calling, which is usually not the reaction from someone that is simply the wrong person.
I had a sinking suspicion that I might have walked into a situation where the owner had passed away and may have contacted the family, or perhaps the owner was in jail, fled the country or who knows what. Either case, I wanted to approach the situation gingerly. Running another more in-depth report, I pulled a few information for potential matches for next of kin or relatives and spent a few hours writing a polite and respectful letter saying that:
- I am a business owner
- I would like to get in touch with Mr. XXXX or someone that can represent Mr. XXXX
- I am interested in Domain X and believe Mr. XXXX to be the owner
- I'm willing to offer fair compensation for Domain X
- That this is important to me, so to please contact me in return, even if I am contacting the wrong person
I then made 12 copies for each remotely potential source, bought 12 Starbucks gift cards with $20 in cash and included those in the envelopes as well, with a note saying that I appreciated any help they could provide. A trip to the shipping store and a pile of FedEx mailers later, I would then wait.
Slowly, over the next few weeks, I began getting emails or even some written letters. All of them said that I had contacted the wrong person or they didn't know who I was looking for. Out of the 12 letters sent, I got 5 responses. I waited a few months, then sent out a second to the remaining 7, saying again that I was serious and put down an actual five figure amount for how much I was willing to pay. After another two months, I eventually got three more replies, so I was up to 8 out of 12.
At this point, I essentially realized that I was going to have to concede defeat. Even Mike was shaking his head at me like I was a crazy stalker. While I was quite certain I had located the proper lead, they were one of the leads that wrote back saying it was the wrong person, so was going to respect their wishes. One of the things in the domain industry that Mike and I have never liked is that it's often a dog eat dog world, and if someone can get a piece of theirs at whatever cost to the other party, it's often looked upon as acceptable. While I am a certainly big fan of the money gods, they luckily aren't the only ones that I worship and it's not worth it to me personally to pursue this opportunity any more than I already had and potentially upset a family or family members by doing so. So, I reluctantly filed this experience away into the insatiable “Another business idea” folder and hoped to soon forget about it.
But, before I did that… knowing the domain was going to expire on August 2015 and feeling that my hunch was right, I put in a domain back-order.
That was three years ago.
So, fast forward to 30 days ago, when I was notified that the domain went into Pre-Release, which is saying that the owner hasn't renewed. After three years, 30 days was no big deal, so I didn't think too much of it… until I got the email saying it had gone to private auction. That means the owner didn't renew after all and this domain was now up for grabs. Wow. The only catch? There are now about 150 bidders vying for the domain, which is about 149 more than when I first back ordered. Rut roh.
It looked like 1:45pm was going to be the final bidding time and I had a doctor's appointment at 1pm, so you would think after waiting for 3 years, I would have bumped my appointment. The reality is that I was at peace with not having this domain and I kept my appointment. If I got home in time to bid, great, if not, there's going to be another opportunity. I'm certainly not devoid for things to spend cash on these days. If I'm perfectly honest, I expected out of the 150 bidders, there would be at least a few professionals in the group that would bid this over $20,000 and make it highly unappealing. It's one thing when I'm turning over rocks and domain mining- it's another thing when everyone is sitting around looking at the same fish in a barrel. It just so happened that this was the fish that had eluded me for years.
So when I got home and logged into NameJet, I couldn't quite believe my eyes when I saw my domain sitting there for $3,600. Something that I was ready to make a five figure offer on years ago.
I waited until the bid timer started getting close to 1 minute and then saw the real pros finally come in and double the price to $6,500.
Ah-ha, I said, the pros are indeed here. Hoping for $3,500 would have been too much it seemed, but I was still blown away that with 150 bidders, there wasn't more competition. Luckily, it was still beneath what I thought was a good deal, so I jumped in on the bidding with $6,576 or $100 above the guy that doubled the bid.
The timer slowly ticked down and with NameJet, the timer extends by another 5 minutes anytime another bid is placed. It only had about a minute left when another bid came in at $6,776. I was really hoping I wasn't against a bidder out to put me in an endurance race.
Instead of waiting for the 4 minutes to count down and play games, I just put down another bid over the top by $100 again. As the minutes ticked down, I kept hitting refresh wondering what were the chances my internet connection goes down at this opportune moment. I didn't want to think about it too hard.
Finally, as it went down to one minute, I kept clicking my mouse on the refresh like I was playing minesweeper on expert mode.
I am now the proud owner of LeatherJacket.com!
And here is the Estibot valuation aka “money shot”:
Now, before I or anyone else goes about congratulating myself on this purchase, Mike and I definitely do not see Estibot as the final say in domain valuations. That said, it is the most commonly referred to measuring stick. In truth, we generally think Estibot overvalues domains quite a bit, which could simply be a reflection of how Google has changed their exact match domain ranking algorithm over the years for keyword domains. Many, many factors play into what we think a domain is worth and a huge part of that is competition and the difficulty of SEO.
I'm still a little confused as to why the rest of the crowd gave up so soon and part of me makes me wonder if Mike and I over valued this domain. I like to believe in the wisdom of the masses, but there can often be other factors at work.
That all said, $6,876 for a domain that is priced at $240,000 by Estibot is a pretty good day. What I didn't win is the great story about how I tracked down an owner using great detective work and forged a deal out of thin air, but at the end of the day (and three years later), things seem to have worked out. I don't know if I'll have plans on trying to flip the domain or eventually building it out (no joke, this is literally how we do business… buy the domain first, build the business second). The ability to build out a business works much more in our favor when buying domains, as we can essentially have the built-out option at our fingertips, which is something that most domainers will probably never be able to execute on.
That said, if anyone out there reading this post is in the leather jacket business, we should talk one way or the other (smile).
Happy Monday everyone!