- Rick Schwartz, who calls himself “The Domain King”, started registering domain names in the 1990s.
- Its sales include porno.com, for $8.9 million, and ireport.com, which CNN bought for $750,000.
- Here’s how it got started and how it still finds unregistered domains, as Ryan S. Gladwin said.
- For more stories, visit Business Insider.
This essay is based on a transcribed conversation with Rick Schwartz, a domain investor living in Florida. It has been edited for length and clarity.
Investing in domain names started during the 15 years I lived on the road, around 1973.
Every night I had to call information to find hotel numbers. It would take a lot of time out of my day.
Eventually I started calling only hotels that had a vanity number 1-800 because I didn’t have to call information to get a room. If a company had a personalized 1-800 number, they had a better chance of getting my contract.
In 1993, investing in these became much easier, so I started buying custom business name numbers. I eventually moved on to the ones the adult industry would like, like 1-800-Make-Out and 1-800-Sir-Love.
I got into the personalized number business quite late, but realized that people in that business didn’t realize that a 1-800 number was the same as a domain name.
But I did. I started registering some of the first 1-800 numbers as domain addresses.
Registering a domain would only cost $100, but initially the service I was registering them with actually had no way to pay for them. So, in a sense, they were my angel investors; by the time they wanted to pay, I had already registered 1,000 domains and was a self-funded business.
Very early on, I registered dick.com. The way I made money was basically renting the website and linking it to someone selling a product and then I made a commission.
My website would be nothing flashy – literally just a black screen with two words: “Click here”. And that would lead you to whoever was paying me for the link.
I would give people traffic they had never seen before. Before I arrived, the company was closing one in 10,000 contracts. Once I started pushing users to the website, they were closing one in 25 or one in 50.
Indeed, the people who came to this site were people curious to know what was on dick.com. This type of person is a very specific individual, and that’s why I was so much more likely to close a deal for them.
Porno.com has probably been my most successful deal. I bought it for $42,000 in 1995. We were getting 33,000 unique visitors a day—that’s a million a month—just people looking for it directly. Some guy bought her traffic exclusively for five years at $1.5 million a year.
What did I do with all this money I received? I have registered more domain names
I mainly focused on mature one-word domains, as well as regular high-value domain names such as property.com. It was a bit like playing Monopoly, trying to buy all the important online properties.
I originally planned to never sell a domain for 20 years, because that’s how long I thought the internet would take to reach its full potential. Why would I want to sell diamonds before anyone knows how valuable a diamond is?
That said, I made my first sale in 1999, just four years after I started investing there. I got a call from a guy who wanted to buy eScore.com for $100,000.
Nowadays, I would never sell a domain for such a low price. But back then, people thought domains were worthless. So selling it proved my theory that they were actually worth something.
Often, I sell a domain to benchmark
I’m like a pole vaulter, always trying to set a new world record. It’s a way for me to value all the other areas.
Now I have, like, 45 sales that I can point to – a lot of them are multi-million dollar sales, and the rest are in the six figures.
The best way to value a domain is to relate the value to the real world. How much does it cost to open a store in the real world? You have to rent a space, furnish it, buy insurance, pay for garbage, employees, etc. What I do is put all those costs together and multiply them by 10-30 years to see what the actual store would be like for that time period and then use that to assess the value of the site.
One of my biggest early sales that moved the needle was ireport.com to CNN for $750,000
Back thenno one could believe it.
It taught me a lot about selling domains to big companies. They have a budget, a schedule and lots of meetings. You have to learn that it is their calendar and not yours. Whether you don’t hear from them for three weeks or a month doesn’t mean anything. Be patient and let it reveal itself.
Then in 2015, 20 years after I started investing in domains, I sold porno.com for $8.88 million in cash.
I’m still registering domains, but at a slower pace than I used to be – I registered about eight in the last month.
It’s hard to find English words that haven’t been recorded yet, so I listen to the news and try to come up with new phrases. I go to Urban Dictionary and look for phrases that might be something for a business in the future.
Just be in front. I always say get to the beach before they find out where the beach is. Your job is to sit there with your chair and your piña colada, then sell to them.