I’m at the Domain Roundtable event here in Seattle, already having fun and meeting good people. I just listened to a fun speech by Mike “Zappy” Zapolin, from InternetRealEstate.com. Mike is the guy who bought beer.com from a bunch of drinking buddies for $80,000 and then sold it for $7 million. Oh, and he owns chocolate.com and software.com and “a few more”.
Of course success stories are always fun, but the news is that domainers like Mike are developing their properties big time right now. It’s not so much about the generic domain name as the generic domain name that has a site on it. The reason? The sales of generic domain name-based businesses are at 20-25 earnings multiples, sometimes despite low profits. So a domain like genericdomain.com by itself has obvious value as a generic domain name, but a business operating on genericdomain.com with $10 million in revenues can sell for $200 million. A business on a domain name is obviously valuable, but that same business on a strong generic domain name for that industry has much more perceived value to the customer. A credit card site doing $10 million per year on BestCreditCardsForYou.com (for example) is worth much less than a credit card business doing $10 milion per year on CreditCards.com, because of the perceived value and trust granted to the generic domain name CreditCards.com. Less than 10x multiple vs 20 or 25x, according to Mike (who used to own CreditCards.com by the way).
So the game is get the sites built and busy, to raise the revenues, to raise the cash out potential alot. Domainers are hiring CEOs to build those businesses, banking on them being worth so-much-more because of their generic domain names. And you all know that one core tool for doing that is SEO.
So all you SEOs out there, consider that when setting your fees. To the extent that you help build a business that will cash out at 20-25x earnings vs 10x or less, what is the SEO effort worth? Think about it. Everybody else is.