This week, Horacio and Stefan sat down with Slade Michalec, Co-founder of Lumis, a domain brokerage firm.
Slade talks about the intricacies of brokering deals for domain names. He also gives updates on the latest trends in the industry, including emerging domains and using equity for acquisitions.
Stefan provides insight into the role Lumis played in helping us here at Alts acquire the alts.co domain
Discussion topics include:
- The dynamics of acquiring domain names for businesses and individuals
- The challenges and processes of contacting owners of domain names
- Methods used to find domain names, including WHOIS records, proprietary tools, experience, and connections within the industry.
- Determining price points for domain names, including premium names, comparable sales, and integration into the owner’s processes and systems
- Using solid research during a meeting of the minds to help broker a deal
- Special payment plans as domain names have appreciated since the beginning of the COVID pandemic.
- Determining value for domain names and their potential subjectivity
- A rise in transactions involving equity or stake in a company
- The rise in .xyz domain extensions
- The .com domain still standing as the premier top-level domain, and its appreciation in value with increased scarcity
You can listen to the podcast through Spotify or YouTube.
[Horacio Ruiz]
Hi, I’m Horacio Ruiz, host of the Alts podcast. Today. I’m going to be joined by Stefan to speak with co-founder of the Lumis Group Slade Michalec. The Lumis Group is a domain brokerage firm working with buyers and sellers of domain names for corporations, small businesses and investors. Slade was instrumental in acquiring our new domain name. alt.co during the company’s renaming. Slade is going to talk about his job and industry at large. And boy, does he have some good stories. Let’s drop in. All right, Slade. Thank you for joining us today. When we were looking up Lumis, we saw that there were so many things did you guys do. And essentially you guys provide a bunch of services. I don’t want to limit it to just you guys being a domain broker, but could you give a quick description of what Lumis does and what it means to acquire and sell domains?
[Slade Michalec]
Yeah, absolutely. So, the basic premise of what we do. We are in fact in a domain brokerage. So, the core competency and focus of what we do is specifically helping buyers in securing and acquiring their domain names that they need for their marketing initiatives, their brand, just their company, overall, ETC. And we do deal with a number of other digital asset acquisitions as well, trademarks being a part of that. But the primary focus of what we do over here at Lumis, we are in fact a domain brokerage and we do help clients to purchase, acquire and secure domain names for their businesses.
[Horacio Ruiz]
That’s pretty fascinating. The extent of my knowledge is basically going on GoDaddy and seeing if something’s available and renting it out. You’re a brokerage, right? So, like who typically approaches you and are you working for like small businesses, larger corporations, and what are the kind of deals that you’re involved with here? Are you buying domain names from people that already own the rights to the name, or are you looking for a name that might fit a new company?
[Slade Michalec]
So, it’s pretty much everything under the sun. We have people that are coming to us looking to acquire a domain for their business. We have people coming to us looking to acquire a domain for personal use, personal reasons. And it’s not just large businesses, as you probably are aware, especially since the pandemic started, and the COVID era started, a lot of brick and mortars now moving online. So, it’s safe to say everyone under the sun has an interest in securing the right domain for their online presence. So small businesses, medium size businesses, large corporate entities, individuals, and everything else that falls under that umbrella. We’re out there helping them to acquire the domain names that they need.
[Horacio Ruiz]
Would you say that that you’ve seen an increase in business or like an activity since COVID first started?
[Slade Michalec]
Yeah, so I think everything along with that, right. So, we’ve seen more activity, definitely have had more business. 2021, believe it or not was our best year to date in terms of the brokerage opportunity that we’ve had. We are seeing that more and more people are being attracted to the internet and ultimately securing that right domain for their brand. On top of that, we’re also seeing that overall, because there is such a stronger demand for these domain names, the value of these domains in general has also appreciated simply due to the demand increasing and the supply being somewhat limited.
[Horacio Ruiz]
So, let’s say like, I’m moving my business to online, right. Like you said, from brick and mortar, what do you typically find the companies do? Do they try and seek out their own domain names first? And then they kind of see, hey, this is a bit of a complicated process, or I need help acquiring the right name, and then they come to you? Or do you find that you’re the first stop that they basically, hey, let me go through the broker first because I don’t really know what I’m getting into?
[Slade Michalec]
Yeah. So, it’s a little bit of both. I can’t tell you how often we are working with someone who has beat their head against the door trying to buy domain weather themselves. They’re trying to find who the owner is, trying to negotiate the sale. It can be a very taxing process. So, we do have clients that have tried to make that connection with the owner of a domain name unsuccessfully. And then they come to us asking for our expertise to help find the owner of the domain name, help put an offer forward to the owner of the domain name and ultimately help them with that acquisition process. But we also have companies who, their first thought is securing a domain. They find our company whether through a referral system or we already have a relationship with that company. And then we help them with that process as well. But also, there’s a third one, right, where the company didn’t necessarily, or the entity did not necessarily go direct to purchase that domain themselves. They actually tried to use a different brokerage firm, whether that be like you mentioned earlier, GoDaddy or any of the other brokerage companies that are out there, right. They’ve gone through the process of trying to acquire domain through these other brokerage firms or companies unsuccessfully, only to end up at our door where we are able to help facilitate that sale for them. Whether that be because they were unable to reach the owner of the domain name, or the owner was difficult to work with and they couldn’t agree to the terms or the price point ETC. A lot of times we do find that the clients that we’re working with, they have attempted to make the acquisition themselves unsuccessfully. And then we also have clients that come to us direct at the first thought of wanting to purchase that domain. So, it’s a little bit of all of that.
[Stefan Von Imhof]
That’s where we came in. Right. And so like, the background for us is like, we had no idea what we were doing when we were trying to switch our domain from alternativeassets.club to Alts. Right. We didn’t know that Alts was going to be our domain. We just knew we wanted something new. We wanted to get off of alternativeassets.club. It was kind of a mouthful. We didn’t like the dot club TLD. We just didn’t know where to begin. I didn’t know how to formulate a list of what was available. And I didn’t know how to reach out to domain owners. Because I didn’t know who the domain owners were. And so, meeting you was like a godsend in all this. I guess my big question is like, how do you know who owns each domain? Right. Like I remember when we worked together, it was like, we gave you a list of some names that we wanted and some dot coms and you basically just said, okay, I’ll get right on it. The whole time I was thinking like, how does he know, how does he figure out who the owner is? Because a lot of the times the owner’s hidden. So, can you tell us a little bit about how you figure out, like, just who owns each domain?
[Slade Michalec]
That is a very loaded question. I’m so involved with the domain space in general and we’ve been brokering for years now. Some things that are so obvious to me, I don’t even think about as a strategy we use for identifying a domain. So, it’s going to be difficult for me to very in detail, explain it. But there are a number of methods that we simply use. Like very direct channels of finding who owns a domain name. The biggest one is the, who is record of ownership, right. If you’re not familiar with what the, who is records are, it’s basically a record of domain ownership and you can review these who is records to find out the details relating to the owner of the domain name. Now, most instances that information is set to private. So, it’s under privacy and it’s very difficult to obtain that information. But we do have a series of proprietary tools that we use as well as other really fundamental tools, such as archive.org, right? You can back date the history of the domain from archive.org or similar tools like that to identify what was previously on the domain name, which can lead you to some insight into who currently owns the domain name. Another big part of how we understand, who owns particular domain names, because we’ve been working in the industry for so long, we have a very strong understanding of who’s who in the industry. So if you gave me a random – especially a more premium domain name that I might be familiar with, but if you gave me a particular domain name just off the cuff, there’s a pretty strong possibility just off of the reference of that domain name, I can say, Oh, I actually, I remember that this particular entity owns this domain name just through working within the industry. So, a lot of times I have insight on the ownership of the domain name that I can’t exactly qualify or quantify why I know this. I just know it. And that’s a big part of the relationships that we’ve also built within the industry. Another thing that helps as well is we have relationships with a number of registrars, registries and different companies within the domain community that we can lean on to sort of, I wouldn’t say leverage information, but actually find more information and more details associated with the owner of a domain name that can help us track them down, identify, find who owns the domain and ultimately reach out to them to be able to acquire that domain for our client. So, it is a very strong, mixed bag of different things that we utilise, but overall, it takes a lot of diligence and research generally. Starting with the, who is record, bar none, that is the first thing that I go to, to help me identify who owns a domain name. Another interesting thing that we sometimes leverage as well is maybe it’s hard for us to identify who currently owns a domain name. But we’re able to identify who previously owned the domain name. So, we might go to the old domain owner, and this is sort of an out of box solution, but we might go to the old domain owner and just frankly ask him, hey, I know you don’t own this domain anymore, but who did you sell it to? Do you care to share that information? And sometimes that leads us to the sale when we could have otherwise not found who owned the domain name. And I think a big takeaway from this is there’s not any stone that we leave unturned. And ultimately our job and the reason that you came to us for a domain like alts.co is who owns that domain, find the domain owner and get the sale done. And that’s core competency of what we do at Lumis. Finding who owns that domain and ultimately interjecting ourselves in that conversation to buy the domain.
[Horacio Ruiz]
So, like, it kind of sounds like you’re like a sleuth, right. A detective trying to find leads to ultimately get to what you want to do. I mean, it sounds like you’re not just brokering deals. The bulk of the job is just kind of digging, right?
[Slade Michalec]
Yeah. If domain brokering doesn’t ever work out for me, which you know, it, fortunately does, my next line of business is to be a PI [laughter].
[Horacio Ruiz]
Let’s talk about that brand name. Right. Because Stefan was talking about, he wanted to change the the name of the company to alts.co. How important is that for the people that approach you, right? Like, we want name or we’re thinking about this name. Could you give me some insight into how the different companies react when, let’s say the name that they really want isn’t available, or the price range might be too much. What are your dealings with that with trying to find the right fit for the company? And then I guess on top of that is, do you mix any like analytics with, let’s say a company that wants to rebrand, but they’re not sure what they want to call themselves. Right. So then do you come in with some sort of information or data with, hey, you’re into cars. We think that these words here or this kind of domain might work for you?
[Slade Michalec]
Yes, sir. You are absolutely right. So, let’s tackle that first question then. Right. So, what does someone do when they’re targeting a domain name? Maybe it’s out of their price point, maybe it’s a bit premium. How do you go through that process? And the first thing is before we ever reach out on domain name, we provide as much of that insight as we can to a client. And there’s a couple takeaway points that you look at to help determine what the figure is going to look like for a particular domain name, what that price point might look like. Whether that’s through evaluating comparable sales, whether that’s looking at what’s the domain currently doing, who currently owns the domain name? Are they using the domain name? To what extent are they using the domain name? How long have they owned that domain name? How integrated into their processes and systems is that domain name? There’s a number of other values we can look at. The premium nature of the domain name. Is it a one word.com English dictionary word? Is it a four-word dot horse domain name? Right. So, we’re looking at all of these factors to help indicate where the market is at for domain name. Another thing that can play a value you into what the price of domain is how populated the brand space is. How many people are wanting to call themselves what you’re wanting to call yourself, right. And how competitive is that? So, we look at what’s all-encompassing to give you the value of that domain name. We provide that to the client and before we even reach out, we find if it makes sense for them, right.
If they find that value, the domain is 10X more than they’re even comfortable having a conversation about spending. Then at that point in time there’s a couple of things you can do there, right. Are they comfortable looking at secondary domain names or domains that they might not have otherwise considered? Is a rebranding option? which most of the time it’s not, but sometimes it can be an option especially if an owner of a domain wants say 60 million dollars. Rebrand might be in the cards or looking at secondary options. So, a lot of times it really just comes down to what the value of the domain is to the client we’re working with to purchase that domain name. What is the perceived value they see of that domain name as it equates to being used for their brand, and ultimately what is the actual price of that domain likely going to cost? So, we give our client all the information that they can use to make the determination on if that domain makes sense or not, prior to us reaching out to the owner of the domain name. Now in many instances, you’ll have a domain owner where they might want a price that’s probably higher than what the we perceive and what the buyer perceives the value of that domain to be. And so that’s where a part of the negotiation comes into play. That’s where some of the factors and details we’ve provided to the buyer to help them prep for what the value of the domain is. We might use that same information and send it over to the owner or seller of a domain name, to help them understand that their price might be a little too high. And ultimately, we try to thread that needle and have a meeting of the minds between both the buyer and the seller to help conduct the sale. I think that was a big part of what we did with alts.co on your domain as well. That was a big part of that as well to help get the price down to a point that makes sense for you guys. Now on top of that, when you are purchasing a domain name, there are other options you can take advantage of rather than just pay all cash for the domain name. A big thing that we are seeing with sellers now, especially as the values of domains increase, is more and more sellers are open to the idea of payment plan. Essentially owner financing on the purchase of a domain name, where instead of paying X amount all up front for the purchase of the domain name, maybe you’ll put a down payment and pay the remaining balance of that domain purchase over an extended period of time in the form of instalments. So, there’s different avenues you can approach the purchase of the domain with. And as long as, again, you have a meeting of the minds between a buyer and seller, there’s a good chance that you can achieve the result you’re looking for during that negotiation. And I went pretty in depth on that. What was the second question that you were asking me Horacio?
[Horacio Ruiz]
The second question was, and you kind of answered it like in terms of the ask and I was just wondering if you had any more analytics, right? Where maybe a keyword isn’t quite right. Maybe an owner’s thinking, hey, I want to be called, I don’t know, coolcars.com. And you find that the word cool maybe isn’t really the best search term or isn’t optimised for SEO, right. How much consulting do you do with the actual names? Because I just imagine like that that’s a big deal, right, like your website name is almost like your identity.
[Slade Michalec]
Absolutely. Yeah. So that’s a good question. So, we do work with a lot of start-ups as well. And if we do have customers, clients that we’ve worked with a lot of times, they might be starting up a new initiative, a new business, a new subsidiary business, right. And they want a whole new brand for their new business that are creating. So, a lot of times, rather than – it’s difficult because there’s such a range of domains that you could suggest for any sort of situation. So, a lot of times we try to pinpoint what exactly the business is going to be that the domain’s going to be used for. Alot of times we just ask to understand what’s the new company that you’re using, what industries are you associated with? Do you have a preference for particular keywords? And the example you gave me, it seems like car or cars might be something that you can look at. Well as an alternative to cars, maybe you look at auto, right. Maybe you look at vehicle, right. So, we can come up with these different scenarios or these different domains that might make sense for what you’re doing. And then a big part of us as a broker, right, we then will go out search within the marketplaces, look at all the inventory that’s out there based on what some of the domain investors have, what some of the marketplaces have. And we try to pinpoint what seems to be available, what seems to be within the price bracket you’re looking for. And then we can compile a list of domains that might make sense, which we then pass onto our clients. And then they can identify, oh, you know what, I didn’t think about that. But this domain is a fantastic suggestion. Maybe we should look at this. And then once you can kind of hone down that list, then you can start looking at different iterations of it to really find what makes the most sense based on the price point, based on the domain itself, the strength of the domain and how it conveys your brand. So yeah, we have enough clients that come to us with those types of instances and a lot of times we do have a list of domains we can just provide to them if. Especially if they don’t have specific criteria they’re looking for, and they’re basically open to almost anything, right. We do have some select list that we can share with clients saying, hey, we know these are available. You’re looking for a more premium domain name. You’re looking for a particular extension. Here’s a list we have, let me know if something makes sense and we can dive deeper into it. And that’s usually the situation surrounding that and how we approach that.
[Stefan Von Imhof]
Can we talk about value for a moment when it comes to domains? Because the interesting thing to me about this market is that the value is just in the eye of the beholder. Like unlike other alternative assets where there’s like a much more transparent market and kind of everyone knows like the quote unquote right price for a piece of farmland or a baseball card. With domains it’s not like that. Right. Because like what’s valuable to one and might be worthless to someone else and vice versa. There’s obviously like certain words and certain TLDs that are clearly valuable when put together. something like money.com or investing.com. Let’s say, everyone’s going to want that. There’s no question about it. But aside from that, it’s kind of a crapshoot as far as like how to determine the value. And there’s no feel-good way to like mathematically infer the value on domains. I know a couple of companies have tried, there’s like Estibot that like kind of tries to pinpoint a value for like the domain, but it doesn’t really work that well. So, when you get down to the nitty gritty and you’re starting to negotiate with the seller on behalf of the buyer, like the seller wants to maximise the sale, the buyer wants to pay as little as possible. How do you fit in? Like, how do you kind of like help negotiate a lower price? And on what grounds do you kind of use to bring the price down?
[Slade Michalec]
Well, it is situational, right. Just to be candid with you. We’ve had some clients come to us saying, hey, I want to buy this domain name. And I’m not pinpointing out anyone particular, but I can tell you, there are some for instance, domain sellers, right, whether that’s a huge corporation that happens to own a wealth of domain names or it’s a domain investor that just happens to own some premium domain names. Sometimes especially if the buyer, they don’t need that domain, they just simply like that domain. And there are potential options they could look at otherwise. A lot of times we’ll tell them, hey look, we know who owns this domain name. We know they typically don’t sell their domain names. And if they sell those domain names, they’re going to ask a value that is likely beyond where the market’s at for this particular domain name. So, what I recommend is that we look at alternate options to see if something else makes sense for you. And if it does make sense for you, let’s pursue those other options. Because I think you can get a better value out of that. And like you were saying, domains, it’s a speculative asset. So, like you said, money.com, to one person that could be a $10,000 domain to another person that could be a million-dollar domain. Again, these are arbitrary numbers, but people perceive value differently. So, it’s really important to understand your client, the buyer that we’d be representing. It’s important to understand how important is that domain to them? Do they benefit from it or do they simply like that domain name? And when you are getting to the nitty gritty of negotiating the sale, a lot of times when you are dealing with sellers, they will always ask the ceiling, right. That’s just how it is. The seller’s going to ask for the ceiling and buyer’s going to start at the floor. And like I said before, it really is about a meeting of the minds. We find that a conversation over the phone really helps clear up a lot of the air when it comes to those things. Especially when you have a seller asking a million dollars on a domain that’s probably worth 20K, right. It’s very easy to explain to them hey look, talking in reference to a seller, it’s very easy for you to say, hey look, you’re asking a million dollars for this domain, right. You’re asking a million dollars for money.com, but currency.com sold for this amount. Which is substantially less than what you’re asking. So where are you driving that value from? Why are you asking so much for this domain name? Because you’re obviously asking more than what the actual domain is worth. And we’re working with a serious client interested in buying this domain name and they’re not willing to pay the price you’re looking at, right. So, you can be very candid with the seller and be very frank about where you, as the broker are seeing the value of this domain name. And a lot of times you can convey that to the seller of a domain name. Cause like I said, they’re going to start at the ceiling and a buyer’s going to start at the floor. So, it’s literally about a meeting of the minds and having both parties understand and perceiving the value the same. That’s when a sale happens. That’s when the mark lands. And that’s really what we’re there to do. And you can be very frank and explain the details of why you’ve derived that value. Hey, look, I’m looking at comparable sales. I recognise that you’re not using this domain name. You’ve had it for five years, but again, you’re not using the domain name. And we have a great company we’re working with that can really drive a lot of value and utilise this domain in a very fantastic way.
[Stefan Von Imhof]
Do they care about that? Like or are they just trying to make a sale?
[Slade Michalec]
Not always. Right. Not always. And that’s where some of the uphill battle does come from in that instance. But a lot of times you are working with someone who they, again, they’re starting at the ceiling, they’re just naming a number. And if you land anywhere close to that, they feel like they won. Right. So, a lot of times it’s just talking to them. It’s explained to them the situation, it’s explaining to them, hey, listen, this is what we’re going to use the domain for. Or this is, hey, listen, we’re representing a fantastic client who could put great use to a domain name you’re not using. On top of that we have a very fair offer. It’s not like we approach these owners of money.com and say hey, we have a $5,000 offer. Why won’t you accept it? Like I can tell you now as a broker, that’s a point that’s a moot point, right. We’re wasting our time because obviously we are way below the market value. But if we can, based on representing a buyer, if we can make an offer that we believe is in line with where the market is. And then we can convey that to the seller we’re approaching, a lot of times a seller can perceive that that is actually the value. And that seems fair. They’re making a fair offer.
Let’s come together and make this sale happen. Right. And that’s a lot of times what we see. Because ultimately if you are open to selling a domain name, you’re going to negotiate to the point of the sale happening, right. You want to sell your asset or otherwise it was a poor investment. So that’s a lot of times what we do, and it works out really well for us and our clients.
[Horacio Ruiz]
When you talk about that, right, the negotiation, I always find that fascinating because you’re sitting down, that’s where the dialogue occurs and that’s kind of where the action is. I don’t want to put you on this spot Slade, but do you have any kind of situations where you were in the negotiations where you were surprised at the outcome? Or when you were like, wow, that was a wild negotiation. Could you share maybe a story or two that are fresh in your mind?
[Slade Michalec]
This is a tale of a domain transaction that was unsuccessful for the buyer we were working with. Because of the unrealistic expectations of the seller. This one isn’t crazy. What ended up being crazy was their unrealistic expectations of the domain name. And I can’t specifically tell you the domain name, but what I can tell you is the perceived value, not just by me, by my whole team, by the buyer, by other people in the industry that I leaned on to get reference points from. I had a client that was willing to spend $250,000 on a particular domain name. Now we didn’t start a $250,000 but ultimately, they were willing to bring the offer to that level. And we did end up doing it during the process of negotiation. And the whole way through the seller, for whatever reason, they were very rude with me. They were unwilling to entertain a conversation. But the moment they’d start telling me they wouldn’t entertain a conversation they would just send me an email of 20 paragraphs explaining why they think the value of the domain is what they think it is. And basically, what it came down to is we made an initial, I think maybe a $150-$175K offer, right to the owner of the domain name. And they got insulted with our offer where they definitely shouldn’t have gotten insulted.
Because basically we were paying where we thought the market was at, and the buyer was willing to come up a bit more just in case. And the first response from the seller of that domain, and I call them the seller, but I don’t think they’ll ever sell it, was that they were insulted by our offer. We were way too aggressive with trying to contact them with that offer. And they needed an order of magnitude more to consider the sale. Now, the biggest issue I had with that was, what is an order of magnitude? What an opinionated response. Order of magnitude for us may be move the offer from 150 to 250. Order of magnitude for someone else might be, hey, listen, you have 150K offer, we need a $300,000 offer an order magnitude more. Okay, that’s fine. Well, when it came to the nuts and bolts of it, when it came to the brass tax, the order of magnitude more that they were talking about was 59 million dollars. And they believed so strongly in it. And after they had told us that I was like, listen thanks so much, but we’re not interested. Right. And then they kept pressing to have a conversation with me to try to get me on board with the sale at 59 million. And so basically that just opened my eyes to how egregious some of these people can be. And it literally falls in the fact that they had a misunderstanding of the perceived value of the domain name we were talking about. And that’s just really what it come down to. Sometimes you literally just run into an instance where you just can’t have a meeting of the minds. Like I was talking about earlier. Sometimes some people are so unrealistic with their expectations, and they’ve also held onto the domain for 10 years. They’re willing to hold onto it for another 10 years in the hopes that they can get that 59 million. And I can tell you, it’s never going to sell for 59 million. But that was a pretty crazy story. I also had someone who, it was weird, they would only accept video calls, right. Video messages, video calls. If you didn’t do a video call, this is a seller I’m talking about, they would not respond to you unless you responded with a video call. Every time they answered the phone on a video call, they were dancing, right. They were making weird things, had costumes on. It was so crazy. And he couldn’t talk to you unless you were kind of reciprocating that. And so, I’m underplaying it. It was a bit more overwhelming, but it was it was pretty crazy.
[Stefan Von Imhof]
It’s interesting, like the seller who wanted 59 million, like they’re not going to get 59 million for a domain clearly. But I’m thinking there might be other ways to kind of pile a domain ownership into something bigger. And I’m wondering if you have any examples of this that you can share? Like, for example, let’s say I own a really valuable domain that I speculated on years ago, and a company comes along and wants it. Now I could sell that domain for, let’s say, I don’t know, maybe 20,000-$30,000 or something like that. But if it’s the right company coming along, what’s really to stop me from saying like, look, I’ll give you the domain for free. Just give me some shares of your company or give me some equity or give me a seat on the board or whatever. Right.
[Slade Michalec]
Right.
[Stefan Von Imhof]
Making like I’ll turn deals. Right. That’s where my brain goes, at least. Like have you ever seen anything like that? Have you ever – is that kind of part of what you offer or help facilitate?
[Slade Michalec]
We just closed one of those sales this week. So absolutely. And it’s becoming more relevant, especially as the price of demands does increase.
[Stefan Von Imhof]
So, it is something that happens?
[Slade Michalec]
Absolutely. Off the top of my head, I can think of about 10 transactions we did like that, something in that ballpark that involved an equity or stake in the company, along with the purchase of the domain name. So, it’s becoming more and more relevant from what I understand. And it’s that’s not always going to be the case. And a lot of buyers will not agree to those terms because ultimately, they don’t want to give up portion of their company for the domain name. Especially if they’ve established themselves on the domain they currently have. Something they don’t see the value in adding equity, but we are seeing it become, at least a little bit more relevant in the negotiation process.
[Horacio Ruiz]
So let’s take it back to on the flip side, right, The investors. Obviously, you have the businesses that own their domain names. But do we have like an understanding or an idea of how many domain names are actually owned? And you alluded to that before, like these giant corporations that hold these domain names that buy up these domain names, or just like private investors. How many of those are actually just tied up as investments?
[Slade Michalec]
I find with corporate entities, especially larger comp corporations, typically their strategy isn’t to just buy domains, invest in them and then sell them for a higher price. Usually, the strategy with a bigger corporation is, or just a company in general, a lot of times they own a domain name, especially if they’re not using it. So, it might seem like they’re investing in it. A lot of times they own the domain name due to previous projects or series of corporate acquisitions. Right. And naturally when you acquire another company and all their assets, you also acquire the domains associated with those companies. So, a lot of times that’s what you see. I’ll give you an example, Oracle and IBM just off the top of my head, those are two companies I know through series of acquisitions. They ultimately have these premium domain names that maybe they’re not using, or maybe they’re just holding onto for legacy accounts for the previous company they acquired or brand protection, right. They don’t want a competitor to end up with that domain name relative to the business that they conduct themselves in. So, a lot of times with corporate entities, it’s not necessarily an investment. It’s really just more of a fact that hey we own this domain name, it’s a fantastic domain name. If we have future endeavours, it’s a great domain to lean on and use. We don’t have to go out and try to seek a domain for a future project. Or again, if they have certain software or internal systems that are utilising the domain. They can’t necessarily just sell the domain name without removing themselves from the domain name. Which typically we find is the case with corporate or when we’re representing a client to buy a domain for a big corporation. Many times, not always, but many times if it appears the domain’s not being used and there’s a potential to secure the domain name. A lot of times it is in fact being used on the back end. And so that’s something we do run into.
[Horacio Ruiz]
Let’s say on a much lower level, right, how often do you get approached by investors? Hey Slade, I got a couple thousand dollars or whatever the case might be, and I want to put some money into potential domain names that I think could have value in the future. Do you find that?
[Slade Michalec]
Yeah. Probably not as often as we used to, and I say that because we’re really the competency of what we do at Lumis is we have been helping the buyers secure domain names, especially people that are outside of the domain space who may not have as much information or understanding of the industry. Right. We’re kind of guiding them through the darkness of that. And that’s a big focus of what we do nowadays. But we still definitely get clients who we’ve established relationships with that are domain investors and they do come to us with hey, listen, I would like to buy this domain. I think it’s a really great investment. Maybe we can get it a bit below where the market’s at or maybe we just pay where the markets at. Lumis and Slade, I know you’re good at finding people. Can you help me find who to speak with, to buy this domain name? I’m willing to pay market price because I think in the future, the market’s going to appreciate for this domain name. So, what can you do to help us? So, we definitely do have domain investors that come to us as well to secure domain names. And then in that same conversation, we also just naturally come across domain names where maybe we have clients that just, initially they might have been somewhat interested in the domain name and then suddenly, uh, you know what, forget it, we’ll never buy that domain name. Maybe they’re rebranding, maybe they’re going a different direction. Maybe they were willing to spend a thousand dollars on a $500,000 domain, right. So sometimes we’ll have a domain on our table saying, hey, look we were already having a conversation with the seller on this domain name. Our buyer is backing out and they’ve very much confirmed they will never proceed with buying that domain again. And so sometimes we have instances where the owner of the domain, they’re still wanting to sell it. And we might have a particular buyer that we’ve already previously worked with, whether that’s a domain investor, whether that’s a big start-up agency or anything like that, someone who’s actively looking to buy a domain for their new brand. And a lot of times we can pair and match those together. Right. Hey, listen, we are negotiating on this domain name. They want half a million dollars. You’re in the market to buy a premium domain name and you’re willing to spend this amount on it. Are you interested in this domain, Sir Mr. Investor, or are you interested in this domain start-up? Right. It’s a good opportunity. And then sometimes we can make the marriage with that. So, it’s again, it’s a loaded question and a loaded answer, but yeah, absolutely. We have investors that come to us seeking assistance and securing domains as well
[Stefan Von Imhof]
In a similar vein. Do you guys ever buy and sell domains yourselves? Like maybe in the course of your investigation, you find a killer domain, but the deal fell through, and you figured God, we could pick this up and sell it in a few years. Is that something you guys are involved in at all? Or do you kind of stay away from that?
[Slade Michalec]
It’s a conflict of interest, right. For helping a client buy a domain and they just couldn’t get to the level they needed to be able to secure it. It would be weird if we bought the domain and then that same buyer came back six months later and says, hey, I just got a round of funding. Let’s do it ready to buy the domain. And then how am I going to explain to the client I was representing, oh by the way we bought that domain.
[Horacio Ruiz]
What do you see kind of trending? So, we’re alts.co right. And what is the benefit of using that dot co domain name, as opposed to say maybe the dot com wasn’t available. But do you see that more companies are using dot xyz or dot biz? What are the trends that you’re seeing right now with these new companies or with the new wave of start-ups?
[Slade Michalec]
So, it’s interesting you say dot xyz, of any extension, if you ask me what is the most recent trend in domain registration without a doubt it’s dot xyz and it literally just exploded onto the scene over the past year. I recently read a report. Basically, I saw that there’s now over seven million dot xyz domain registrations, which if you compare it to all the other varying extensions out there, that is a substantial amount. Especially if you compare it to other GTLD, the dot xyz extension has just been exploding. And we’re seeing a big use, a lot of smaller companies, but also a lot of crypto blockchain related companies are really starting to adopt the dot xyz extension. And you’re starting to see now that everyone’s adopting it, the aftermarket. So now there’s a lot more investors getting involved in dot xyz domain purchases, because now the resale value is much higher. So, of any domain extension dot xyz would probably be the most relevant in terms of the most trendy domain names currently, in terms of extension. But with that, as you probably are aware, dot io has gained traction for the past, nearly decade at this point. And then dot co’s always held a value for a secondary extension as you guys are probably aware. And yeah, those are probably the most relevant ones I’m seeing. Dot net always has its place. dot org obviously always has its place. But yeah, like you mentioned, Horacio. And for someone who is maybe somewhat out of the domain space or domain community, you recognised dot xyz since you literally just mentioned it. So that alone tells me how much value and how much relevance and trending the dot xyz extension has.
[Stefan Von Imhof]
One question I have on this is, and I want to get your opinion. So, we all kind of thought like maybe like 10, 15 years ago that the influx of new TLDs would mean that dot coms would kind of lose their importance. And like having a dot com wouldn’t be as big of a deal because whatever word you’re looking for, you could always pick up first, it was dot net, then it was dot co than later dot io and dot xyz. And there’s always going to be more and more and more. But it’s kind of like the opposite has happened in a way. And like, it almost is like dot com, it’s like retained the exclusive king of domain’s title after all these years. Is that kind of how you see it? Or do you see like the dot com kind of dynasty getting kind of chipped away a little bit by just the endless new TLD is that come up every year?
[Slade Michalec]
Well, I think with new TLDs is you got to have an adoption of them. If you’re not adopting it, it’s not going to gain any traction. And ultimately all you have is a new TLD with no one using it. So, I think the big thing is, and a common saying that you heard in this space maybe a few years ago, especially was dot com is king. That’s what you always heard, right. dot com is king. And obviously everything is considered secondary. Especially if you take into consideration how many dot com domain registrations there are as, compared to any other alternate extension. But I think a big part of dot com is it had the first mover advantage, right. It was the first real extension that was out there per se. And the first one that people were primarily using, etc. And since then, dot com is king, right. It’s always retained that value. And I would have to say for the foreseeable future, I really do believe dot com is going to hold and maintain that value. However, what I can tell you is a couple things are happening and I could probably answer this 20 different ways, but the dot com extension, because it’s maintained as the most sought out domain extension, it’s always going to hold that value. If you go anywhere in the world, right, give you an example, maybe China for instance, right, they’re going to have a use of their local country code domain extension, just like the US is dot us, UK has dot uk dot co dot uk, all these right type of things, right. China, for instance, they’re going to utilise dot cn, and any other variation of their TLG that they have. However, they’re also going to be familiar with the dot com. They might not be familiar with the dot horse, but they’re going to know the dot com. And that’s the case anywhere in the world. Dot com gives you essentially gives you global recognition almost instantaneously because everyone in the world, and I haven’t found this to not be the case yet, everyone’s going to be familiar with what a dot com is, first and foremost, right. Dot io, dot ai, for instance, right. Maybe they’ll be familiar, but without question, they’re going to know what the dot com is, and it gains, and it obtains that instant global recognition and brand ability, and that’s why dot com I think is always going to hold value. And a big part of that again, is that first mover advantage and the dot com is king. I always think that’s going to be relevant.
[Stefan Von Imhof]
The parallels between this and Bitcoin are pretty fascinating if you think about it, right. Bitcoin was first, it had first mover advantage. It’s definitely not the most used anymore. It’s definitely not like the best, but it was first it’s the king, it’s got a legacy built into it. Now that’s just really difficult to unseat. And I think that’s the same with dot com. It’s just global panache, right?
[Slade Michalec]
I was just about to say that I think you literally nailed it. And it’s funny because what’s really happening now is there’s more companies moving into the online space. Like I said, more brick and mortar moving to online. And what you’re seeing is because everyone is recognises dot com as a global extension. Everyone’s first thought for the most part, not always, everyone’s first thought is this is our brand. What’s the dot com doing? Can we get it? Right. That’s not necessarily everyone’s first thought. But most people, I imagine they first look at what the dot com domain extension’s doing, and if it’s sensible for them to be able to acquire, right. And because of that, the demand for dot coms is always going to be there if not ever growing. But the supply of dot coms is going to start diminishing as it has been. There’s a lot of solid companies who aren’t going anywhere and they use the dot com, and they’ll never sell it. And that’s becoming more and more and more and more relevant. So, you have a demand going up, supply going down. There’s only one thing that can happen in that instance. And you’re going to see the value of dot coms appreciating as we have seen especially over the past few years, now with that appreciating value in dot coms, suddenly over the past, especially about three, four years, you’re just seeing an explosion of these secondary extensions, starting to gain more value as well. Because again, like we were just saying, there is more supply of these alternate extensions, but the demand keeps increasing and increasing. So, we’re starting to see these secondary markets for domain extensions, starting to expand and starting to grow a big part because hey, the dot com now is $500,000. I can’t afford that, but I can afford a $20,000 domain with this particular extension. It fits what we’re doing. For instance, you’re looking at dot ai domain and you’re an artificial intelligence company, which again, those companies are growing and growing and growing every day. Now you can start looking at these alternate extensions because dot ai’s getting traction, right. It makes sense to what we’re doing, right. It explains on the right side of the dot that we’re an AI company without you even having to visit our site. And on top of that, we can get a one-word dot ai for a much lower value than what we’re looking at for these dot com extensions with the same word on the left of the dot. So, you’re starting to see more people being driven to these secondary markets, because it’s more sensible for what they do. Maybe they have a good idea for developing their brand and their perception of their brand, and they can utilise it and create a great campaign to establish themselves on the dot ai extension, for instance. There’s also obviously a ton of other alternating extensions that you can look at as well. But I think that’s a big part of it, right. Dot com, like you said, dot com is king similar to Bitcoin, has a legacy thing. First mover advantage, always going to have that value. And because of the demand being driven so much right now, and the supply being more limited, the value of dot coms are going up. So people are starting to look elsewhere for different avenues that can still be used for their businesses. And that’s really what we’re seeing.
[Horacio Ruiz]
Just to kind of backtrack. This is a completely new question, right. When you’re brokering the domain name, right, you’re basically really brokering the rights to the name for a while, right? Because nobody really owns their domain name. What they’re doing is they’re renting it out for a while and then they have to renew that name every so often. Is that correct?
[Slade Michalec]
Yeah, that’s pretty much correct. You can’t truly own a domain name, right. You can’t own a domain and never have to worry about it again, because it’s yours and no one else can take it from you. What’s really happening is you’re registering the rights to use a domain name. You can never truly own that domain name per se. And basically, what you’re needing to do is make sure that you’re keeping up to date with the renewal registration costs for that domain name. And that’s an annual thing. So, each year, whatever time that falls in the year, it depends on when you first registered, came in possession of the use of that domain, each year there’s an annual fee, need to make sure you pay, otherwise you could lose the ability to use that domain. And yeah, I’m glad you hit that topic that is important for some people to understand.
[Horacio Ruiz]
How about names? What are the legal ramifications, right, If I want to buy a domain name with somebody’s name that they haven’t bought yet? And I know this sounds maybe a little strange, but what if somebody is betting on a kid, a teenager to make it big in the future, and they say this kid’s going to be a star. I’m going to go and buy their domain name because I think that they’re going to be famous. Are there any kind of restrictions on that?
[Slade Michalec]
There are restrictions in a sense, but not necessarily when it comes to something like that. Like a big one that comes up is trademark issues, right. So maybe someone’s laptop technologies inc, right. And maybe they use laptoptechnologies.com. If you go out and try to acquire laptoptech.com, right. Just a shortened version of it, but maybe you can leverage some negotiation with them. Sometimes that can be an issue, especially with trademark infringement and things of that nature. And people can pursue you through that avenue. But in terms of like, especially like something as general as a name. If some dude’s name is Toby or something like that, and you’re like, Toby’s going to make it big. Let me get the domain name. There’s not necessarily any ramifications on that, especially with you securing the domain so early on. Especially if they’re, again, they’re a stellar athlete, but they’re only in grade school still. You know what I mean? Like, all that really tells me is you’re just trying to make an investment and there might be some risk involved in it. There’s not a huge issue or ramification in that per se. Now I think things start coming to an issue if you own lebron.com, right. A little different story there. His identity is his brand. You know what I’m saying? So, there are some issues that can come up with something like that. And so, it really is a – it’s a hurdle you have to kind of understand and like walk the fine line. But yeah, if you’re really targeting, again, someone’s name and they’re a bit younger, you think they’re going to be successful in the future. There isn’t necessarily any major ramifications that can come of that. In saying that I’m sure there have been some instances that have occurred where there were ramifications just to be frank with you.
[Stefan Von Imhof]
Is that something you guys advise on? like the trademark issues and kind of the legality of some of the names? Is that something, I mean, I’m sure that’s a question that comes up a lot. I know it’s certainly a question we had. We kind of did our own independent research on that. But is that something that you guys help with advice with at all?
[Slade Michalec]
We can certainly advise you a hundred percent. But I just want to make it very clear. We are not legal representation. We have no legal authority. So, I always tell my clients, go through a third party or do conduct it internally if you have the ability to do that. But definitely lean on some legal professionals to help give you that advice. I can advise. I can tell you what we’re seeing. I can give you some documentation and things to reference, right. But I am not legal counsel. And we do not claim that we’re legal counsel.
[Horacio Ruiz]
How can someone get in touch with you, Slade? There’s so much to kind of unpack, what you told us, it sounds like – you seem like a very busy guy, which is a good thing. If someone’s looking to get in touch with you, someone’s looking to like, we were looking to get a name change, how can they get in touch with you?
[Slade Michalec]
I mean, direct communication channels, email, phone, probably the best way to get me. It’s [email protected]. It’s S-L-A-D-E @ L-U-M-I-S dot com. Or you can shoot us an email over at sales@lumis, and I’ll be getting that. And likewise, my phone number based in the states. So, +1 8636603253. Those would probably be the best ways to get a hold of me.
[Stefan Von Imhof]
Lumis is a great domain, man. Nice job getting that one.
[Slade Michalec]
Oh, stop it. You’re just saying that [laughter]. Thanks so much. It’s a good example of something that doesn’t necessarily mean anything, but you can establish a great brand on it. We actually had that same thought when we first got the domain name. We sat on it for a while thinking, is this going to work? Can we make it work? And then we started liking the hell out of it. And by nature of it, it became something bigger than what we initially thought.
[Stefan Von Imhof]
It’s a cool word. I really do like it; it rolls off the tongue. But I think on one hand you kind of have this like growing movement of people saying that like domains doesn’t really matter what you’d pick. I mean, we live in a product centric, MVP kind of world. Like it’s more important to just get something out there, get customers, build something people want. And the domain kind of doesn’t really matter. And on one hand, that’s true. But on the other hand, it’s just not true. Like the domain just matters. It just does. It always has. And it always will. And as much as people want to maybe think it doesn’t, I think that in the end, it really, really is a really important part of your digital identity, your brand. So, thank you for all of your insights today. And of course, thank you for helping secure a domain that we just, we love it here. And we think it’s great. And you’ve been a huge help in that. So, thank you Slade.
[Stefan Von Imhof]
Yes, Stefan. No problem. I love hearing that. Always happy to help you guys.
[Horacio Ruiz]
Slate really knows the domain name in the industry in and out. And I hope you enjoyed and learned from today’s podcast. I could sense that Slate’s negotiation skills are only a part of what he does on a day-to-day basis. If you enjoy today’s guest or other episodes on the podcast, please follow us or subscribe. Leave a review. Believe it or not it helps out. Take care. And until next time.