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Zappy's Proven Process to Extract Maximum Value from Domain
Names - With Michael Zapolin
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Here's your program.
Michael Cyger: Hey everyone. My name is Michael Cyger, and I'm the Publisher of DomainSherpa.com - the website where you come to learn how to become a successful domain name investor or online entrepreneur directly from the experts.
I pride myself on being a lifelong learner. This means that I approach life, both professionally and personally, with an open mind and an eye for improvement and innovation. And I know the best way to take advantage of this is to observe others, and learn what they are doing, and understand why.
Today's guest has a track record of several notable online business successes, and has developed relationships with some extraordinary people. His process for online business success begins by securing a quality domain name.
Today we are joined by Michael "Zappy" Zapolin - Internet visionary and entrepreneur who most recently added the title of Film Maker to his bio. We are going to learn about that later in the show. Zappy, welcome to the show.
Michael Zapolin: Yeah, great to be here, Michael. I love this show.
Michael C: Thank you. First off, everyone calls you Zappy. I want to know who was the very first person to call you Zappy.
Michael Z: It was some kid in my neighborhood growing up when I was real young and just started the nickname, and people, for whatever reason, love saying it. And then, later in life, my first name is Michael and there are so many Michael's out there. I guess my parents weren't overly creative back
when I was born. And so, I get on these conference calls and it would be like:
"Mike, Mike, Mike," and I have like two or three Mikes on there. So I just said, "Look, I am just going to go with Zappy," and it has been pretty good.
You get off the call and it is pretty clear which person was speaking. So, that was key.
Michael Zapolin (InternetRealEstate.com) Page 2 of 47 DomainSherpa.com: http://www.domainsherpa.com http://twitter.com/domainsherpa http://facebook.com/domainsherpa DomainSherpa.com: The Domain Name Authority Michael C: I love that. I had the exact same problem growing up. There was always at least two or three other Michaels in my Elementary School classes.
It seemed to thin out a little bit as I got older, but I need a good nickname like that as well. So, you have blazed quite a trail on the Internet for the past fifteen plus years. Do you remember the first domain name that you purchased?
Michael Z: Yeah, legitimately, the first domain that I bought was Beer.com.
And the way that that happened was I was making infomercials at the time, and I had a pretty successful Internet company going, and I had a couple of shows that were doing really well and I was making money. And I started to think to myself about what I was doing, and I thought: "Wow, if I could just get my own 24-hour television network with 24-hour ordering, that would be like the Holy Grail. If I can find that, then it is going to be incredible." And 1997 or so I saw the Internet and I was like: "Oh my God! That is a 24-hour network. 24-hour ordering. This is going to be incredible." So, I came up with the idea was that if I was going to enter the Internet, I did not want it to be like my infomercial business, where I had all this process where I had to find a product and license it, and then market it and get people to know about it. I thought to myself: "If I could eliminate some of the process by having like a category generic domain name - something like Beer.com or Diamond.com." I was thinking: "I would already have credibility, I would already have some traffic, and then, when other people came on the Internet, I would rise with the tide." And I thought: "Wow, this is great. Let me go find a domain name to work on." And I thought to myself: "If I am going to jump into this business and take a few years to develop it, I want it to be big enough so that, when I am done, it is not like ForMike@Table.com and then I build it up, and there is nobody to sell it to." So I did what I called my Super Bowl Test, which was: If it is a big enough category to advertise at the Super Bowl, then that is a big enough category for me to spend a few years developing. So I made the list and it was like Beer, Cars, Computers, Insurance, and Diamond Rings. Top of the list was beer, and so I typed in Beer.com into my browser. This was now 1998. And up comes this kind of what I would call a hobbyist site. It was a young kid - 21+ year old kid - who had pictures of him and his friends on there. They were like throwing up from drinking too much. And, at the top, there was a banner and it said, "We need Michael Zapolin (InternetRealEstate.com) Page 3 of 47 DomainSherpa.com: http://www.domainsherpa.com http://twitter.com/domainsherpa http://facebook.com/domainsherpa DomainSherpa.com: The Domain Name Authority advertisers so we can buy more beer." And I was like: "Wow, that is interesting," so I look him up in the WhoIS Directory at the time and it comes up with this kid. He is Colorado and I am thinking: "The guy is in Colorado and he cannot find a beer sponsor? Like you really need some marketing assistance."
Michael C: Yeah.
Michael Z: So, I, again, thought to myself: "Before I just jump head first into the beer business, I would love to eliminate some of the process of getting to all the Millers and Budweisers. How do I do that?" And I thought: "I know some guys that do liquor promotions all around the country. Maybe they have some access to these beer companies." So, I approached the owners of that company and they had Miller and a couple of other beer companies that were already clients.
Michael C: So they were agencies. They were marketing agencies?
Michael Z: Yeah, they were a specialty agency, where, if it was Bacardi night in two hundred bars across the country, they would have the good looking people there with the signage, and they would be passing out the schwag and everything.
Michael C: Got you.
Michael Z: But they had a couple of beer guys. So I went to them and I said, "Look, I want to make Beer.com like a beer advertising portal for people to hang out, but also advertisers to be able to connect with these passionate beer people." So, they loved it. They were smart guys. They said, "Let's do it," so we approached the owners and he said, "Yeah, I will sell you Beer.com and let you develop. It looks like you have got a lot of good stuff going on." So we had to come up with a price at the time. This is 1998. So, I said, "Look, let's just pretend that this is worth one hundred thousand dollars. And I think we should give you eighty thousand dollars in cash, and you keep twenty percent of Beer.com because I am going to develop it and all of these advertisers are going to come in; and you are going to bummed out if you do not have a piece of this as it grows." So, he said, "All right. Sounds like a Michael Zapolin (InternetRealEstate.com) Page 4 of 47 DomainSherpa.com: http://www.domainsherpa.com http://twitter.com/domainsherpa http://facebook.com/domainsherpa DomainSherpa.com: The Domain Name Authority good deal." We gave him that eighty thousand in cash. He actually claimed he was a retiring to Breckenridge along with eighty grand.
Michael C: Love it.
Michael Z: Yeah. So, he went off. He was doing his thing. I just, very inexpensively - several thousand dollars or less -, put a new looking Beer.com. So, it was How to Brew Beer, or Rate Your Favorite Beer, or Get a Free Beer.com Email. And what I noticed was the cool thing about the email was I was giving them out and people were signing up for FallingDownDrunk@Beer.com or Michael@Beer.com, but a few hundred of these were being registered every day and given out. And so, I was excited about that. And I, again, wanted to eliminate some of the process, and this is one of the business mantras that I have; is eliminate the process in your business. So, instead of waiting for all the beer companies to figure out what we were doing and how it matched with what they were doing, I put out some press in the industry about the fact that we were redeveloping Beer.com into this beer portal community site. And boom, I get calls from all the beer companies.
Michael C: Really?
Michael Z: Calling and asking: "Hey, we would like to advertise or we would like to talk to you." One of the calls I got was from McKenzie up in Toronto, and they said, "We represent Interbrew, which is now called Ambev - a five billion dollar beer company -, and we want you to come up to Toronto and talk to us about how we could get involved." So, I went up to Toronto; and this is from a negotiating domain standpoint. This is probably a classic case.
Michael C: And at this point, you had a website - what some people may call today a mini-site - with maybe five or ten pages on How To Brew and Where To Buy, and Hops and things like that, but you did not even have this social community, where people could interact or rate beers. You had assigned email addresses, and that was pretty much it.
Michael Z: Yeah, it was really thin. It was very thin. It was kind of like we were a poster for what was going to come.
Michael Zapolin (InternetRealEstate.com) Page 5 of 47 DomainSherpa.com: http://www.domainsherpa.com http://twitter.com/domainsherpa http://facebook.com/domainsherpa DomainSherpa.com: The Domain Name Authority Michael C: Right.
Michael Z: And so, classic negotiation with Interbrew. They would get me in their corporate suite and they are feeding me beers and stuff, and they say, "Look, you guys are having fun, but we are a giant beer company. So, no matter what you do, it is never really going to add up to what we could do.
So, why don't, instead of doing your crazy stuff, you just let us buy Beer.com from you?" And so, I said, "All right. Well, I guess I am probably up for it at the right price, but we are having a good time." So they said, "All right. Well, we want to give you one million dollars. You are going to be a millionaire," you know?
Michael C: They just threw that out. You are sitting around the table; you are drinking beers. They are like: "How about one million dollars?" Michael Z: Yeah.
Michael C: Back in 1998.
Michael Z: 1998. And they were super psyched to give me that. And again, I said to them: "Look." I go: "Well, we already have some advertisers that are going to come onboard, and we are having fun, and we are developing maybe even our own kind of beer, and we have got a network of people, and we are giving these Beer.com emails." I go: "I do not think my partners are going to let this thing go for less than ten million dollars." And they were like: "What?
Ten million dollars? That is ridiculous. All you have is a placeholder site."
And I was like: "Well, we are having fun, and you can advertise or I am sure (Unclear 10:45.8). We can figure it out." So they said, "All right. Well, hold on. We are going to huddle up." So they huddled up and they came back in the room and they said, "How about seven million?" And I was like negotiation. You try not to get too crazy-eyed, but at the same time you do not want to take a step back where they go: "Oh, wait a minute, but we meant five."
Michael C: Right. You got to make them earn it. Yeah.
Michael Zapolin (InternetRealEstate.com) Page 6 of 47 DomainSherpa.com: http://www.domainsherpa.com http://twitter.com/domainsherpa http://facebook.com/domainsherpa DomainSherpa.com: The Domain Name Authority Michael Z: I was like: "I don't think my guys are going to let it go for less than ten," but I said, "Let me make a phone call. I will huddle them up." So they said, "All right." So, they gave me a few minutes, I called my buddies, and they were freaking out like me.
So, I get back into the room and I said, "Eight million; we will do it." And they gave me all this rationality like:
"Seven million, and we give you a bunch of beer and schwag," and I was like: "All right. Let's do it."
Michael C: Is that like beer for life? What would it be?