The Tim Ferriss Show - #711: Andrew Rosener — Becoming The Hokkaido Scallop King, Leasing Blue Chip URLs, Life Tenets from Charlie Tuna, Selling 8-Figure Domains, and More

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Starting point is 00:04:12 Hello boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to deconstruct world-class performers, to tease out the habits, routines, lessons learned, etc. that you can apply to your own lives. And of course, I interview experts across a very wide range of areas. They could be in the military, they could be chess grandmasters, they could be athletes, they could be actors, they could be CEOs. And in this case, we have a polymath who one could argue was the king of Hokkaido scallops. What the hell does that mean? Well, we get into it in the conversation. He has an eclectic bio, Andrew Rosner. Andrew is the founder and CEO of Media Options, which has been the number one

Starting point is 00:04:59 domain broker in the world for the last six consecutive years. We talk about a lot more than domains and his life trajectory, his adventures are amazing. His mentors are characters to put it mildly, but let's focus on the bio. Since 2008, Andrew has been involved in more than $600 million in domain sales and has played a pivotal role in numerous high-profile domain name transactions, including x.com to Elon Musk, zoom.com to Zoom, and prime.com and podcast.com to Amazon, as well as thousands of others. So we get into how this business works, what the ecosystem looks like, what best practices look like, what differentiation looks like. And we also talk about all of those things and how he cut his teeth in the seafood arbitrage business and in other

Starting point is 00:05:52 areas. Andrew is an inductee of the domain name Hall of Fame. He was named Domain Investor of the Year by Traffic, and he is the creator of the Rosner Equation, which he did not name himself. It was named after him, a formula for objectively valuing domain names widely adopted by the industry. Andrew is also the owner of DomainSherpa.com, the industry's leading educational podcast on all things domains. You can find him on Twitter at Andrew Rosner, R-O-S-E-N-E-R. And one note before we dive in, Andrew and I got into the weeds on domain valuation. We really got into the technicalities, which is super interesting, but that discussion, because it was deep in the weeds, was moved to the end of this interview for Flow. So be sure

Starting point is 00:06:40 to stick around to hear Andrew's answer related to how do you actually determine an objectively defensible valuation for domain names. Fascinating topic, but it got quite detailed, so we moved it to the end of the conversation, so stick around. And with that said, please enjoy a very wide-ranging conversation with Andrew Rosner. So I usually have a pretty good idea of where I'm going to start these conversations. And I'm looking at this list, and it's like a combination of memento meets Forrest Gump meets globetrotting.

Starting point is 00:07:22 And I'm going to let you choose. So should we start with, this will be very back and forth. We're going to fast forward, rewind so we can start at any point really. Charlie Tuna or why you paid $25,000 to buy fuckyourself.com just to get an email address or pilgrims. Where should we start? Whoa, all right. Let's start with Charlie Tuna because it inspires all else. Perfect. Who the hell or what the hell is Charlie Tuna? In college, I studied management information systems,

Starting point is 00:08:02 which was basically a hybrid of business and computer science. I chose that because quite pragmatically as I am, it was at that time in 1990, mid-90s, the highest paying job out of college. And so I said, well, that's what I'm going to do. So I did that. And I started a software business in East Hampton, as a matter of fact. And I quickly realized that it was not what I want to do with my life. And so I then subsequently graduated a few months later after coming to that realization with a degree in something I didn't want to do. And I had no idea what I was going to do with my life. And I got a call from so-called Charlie Tuna, a very, very close friend, somebody I would call a mentor and an extraordinarily

Starting point is 00:08:46 unique individual on this planet, Peter Murky. So I get a call from Peter Murky and Peter says, do you want to come sell fish? How did he get your name or number? So Peter contacted University of Rhode Island where I went to school. He contacted the business school and he said, I'm looking for an entrepreneurial go-getter to become my mini-me. And Peter wanted to retire and he wanted to train somebody that had not come from the seafood industry. That's what we call foreshadowing, folks. Yeah. He wanted to train somebody to basically take over the business in his own image. And I was the chosen one. So anyways, I basically told him to go pound sand. And then at that point, he offered me $1,000 to

Starting point is 00:09:32 come hang out with him for the day in Newport, Rhode Island. And I did. And it was kind of like love at first sight. I just, we hit it off. I walked into the office in a business suit with a tie on and a briefcase, my resume in the briefcase. And, you know, the secretary let me into his office and he had his feet up on the desk and he was blowing out a bong hit. And he looked at me and he said, if you ever come in my office in a suit again, it'll be the last time you ever come in my office. What was he wearing? He was wearing a, like a Native American poncho type of thing. And he's got long hair with a ponytail and this unique beard that only Peter could carry.

Starting point is 00:10:13 But he's a brilliant man. He's a Stanford grad. He's an old hippie. And he just has a unique perspective on the world. I've never encountered anybody else that sees the world the way that he does. And I think it was probably the most important event of my life because I'm ambitious and I'm aggressive and I'm full of energy and ready to go tear the ass out of the world, but without any real direction. Isn't always the weapon suited to the task.

Starting point is 00:10:43 Absolutely not. Absolutely not not but at that age you know it's better than nothing yeah and peter was very good at harnessing that and pointing it in certain directions directions that were beneficial to yeah so i went under peter's wing and and i spent eight years in the seafood business the frozen seafood business i traveled the world i I negotiated with, I couldn't even imagine the number of different countries and the types of people. I literally did business with some of the worst people on earth. The fish business is a cash business, basically worldwide. And so it lends itself to certain elements. It was just an amazing

Starting point is 00:11:20 life experience. So walk me through what it looks like, let's just say your first week or month on the job. How is the compensation set up and what are you actually trying to do? So my first day on the job, I come into the office, obviously no longer wearing a business suit. And I sit down at my designated desk. Now there's only about, I don't know, at that time, four or five people. And so I sit down at my desk and I don't know, an hour or two later, Peter comes out of his office and he comes over to me and I'm basically sitting there doing nothing. I've got some reading material that somebody has given me to look over. And he walks over to my desk and he points at a poster on the wall that says exactitude. And he says, do you know what that means? And I said, no. And he said, have you ever read the book Atlas Shrugged?

Starting point is 00:12:06 I said, no. He said, have you ever heard of it? I said, no. He says, do you know who Ayn Rand is? I said, no. Went into his office without saying a word. Went into his office, got a copy of Atlas Shrugged, brought it back to me.

Starting point is 00:12:19 And he said, go home now. And I was like, go read this book. Don't come back in until you're done. And so I literally, I went home and I literally took about five days to read the book. It's a big book. It's not a short book. No, it's not. It's a big book.

Starting point is 00:12:31 And it's not easy reading either. At least the first like 200 pages. It's like a 200 page intro. And so I read the book. I came back in. It was kind of like a fifth grade book review. And I don't know, I guess I passed. That was it. And then it was like, okay, look, come with me. And he took me down to New Bedford,

Starting point is 00:12:49 Massachusetts and drove me around to these different scallop processing facilities. And I met some absolutely crazy people, amazing, amazing people. These are just truly to this day, like I was just actually back in Rhode Island in September, the end of September, for a little memorial thing. And I met up with some of these guys that I hadn't seen in a long time. And yeah, it brought me right back. They're really just amazing people. You just don't, I'm sure there's other industries like that, but seafood is a really special,

Starting point is 00:13:19 truly salt of the earth business. And such a dichotomy from the business I'm in today. In that boiler room, what did exactitude mean? Why was it on the wall? I think it means different things to different people. To Peter, what it meant was having the right information in order to arrive at the right answer. He did not like knee-jerk reactions. He didn't like knee-jerk answers or imprecision. So once you've read Atlas Shrugged, which I'll admit I've not read, but I know. I know. Shame unto me. Once you've read that, you come back five days later. At that point, is it some form of arbitrage? Like what is the business model?

Starting point is 00:14:05 Yeah, basically. So what's remarkable is Peter's business is still going today. I think now it's 40. Yeah, I think he started in 1985. So roughly 40 years, 38 years. He doesn't own a factory. He doesn't process. He doesn't own boats.

Starting point is 00:14:20 He's primarily scallops. There's other businesses, but it's, let's say, core businesses, scallops. And 100% of his competition owns, at a minimum, they own the processing plant. Most of them own boats. Most of them have joint ventures or partnerships with foreign processors, aquaculture, et cetera. And despite these seeming disadvantages, Peter has been nimble and he's kept his overhead low. And through the good times and the bad, he's just kept that business running. And is he buying and then reselling? Buying, putting in his packaging. In some cases, I don't know if we want to go into that today, but let's call it value add.

Starting point is 00:15:00 We can skip certain details if needed. They would say they're value adding and repackaging and then reselling. It's a pure arbitrage. So what was the annual turnover? And I'm going to hop to a specific example. So what was the annual revenues roughly when you started there? They were doing about $7 or $8 million a year when I started. And how did it grow?

Starting point is 00:15:24 Quite quickly, we realized I was good at this game. And I became the vice president of sales. And I think when we left, we were about 35 million. Okay. How do... Which is a lot of scallops. Yeah. How do Hokkaido scallops fit into this picture? Northern island of Japan, for people who may not know. Yep. So basically this is a pure sales game, right? So I literally have the equivalent of a phone book, but it's the who's who of the seafood industry. And I'm literally making about, I don't know, 150 calls every day. And it's just cold calling, cold calling.

Starting point is 00:15:58 And you're selling to distributors, to restaurants? No, no restaurants. Primarily distributors, other wholesalers, restaurant supply companies, cruise lines. So I say no restaurants, but large restaurant chains, which is where we're going with the story. But a couple of years in, I come across Benihana and I call up the Fort Lauderdale headquarters of Benihana and you guys want to buy some scallops. And it's just pure luck that they happened to be in a transition period where they'd been getting all of their seafood from one company.

Starting point is 00:16:29 And they decided that they could get better pricing and there was other advantages by- Put out a bid. Put out a bid for each individual product. And so it was just great timing. And so I had the opportunity to put in a bid and by any stretch of the imagination, I shouldn't have had any chance of winning the contract. But as fate would have it, I did my due diligence on the buyer.

Starting point is 00:16:52 And he was Nicaraguan by descent. And he loves cigars. And Peter happened to be a cigar connoisseur. And so he sent me to his guy who could basically source any cigar. I said, look, I'm looking for an amazing, amazing cigar that if it happened to be from Nicaragua, might even give me an extra edge, but something that's going to be really wow. And he said, I've got a cigar for you now. I couldn't even tell you what that cigar is, but it was a very expensive, very good cigar. I got a box of them. And so I flew down to Fort Lauderdale

Starting point is 00:17:25 and I took this guy out to dinner and I gave him this box of cigars. And the fact that I knew he was from Nicaragua, the fact that I happened to know this, I didn't actually know, but he thought I did this brand of cigars, I nailed it. And so we had an amazing dinner and we drank way too much. And ultimately I made this sales pitch about Hokkaido scallops.

Starting point is 00:17:47 I said, look, you guys are using American scallops, okay? And American scallops are great. Arguably, if you're getting them pure form, which it's very difficult, it's the best in the world. However- Pure form meaning like unadulterated. Unadulterated, you know, within a couple of days. Crab meat. Yeah. Yeah. Yeah. Type of scallop. Yeah. Yeah. That's the least of your worries.

Starting point is 00:18:11 It's the value adding part that it's not so you're eating guinea pigs. Yeah. Yeah. Okay. So the interesting part of this was basically American scallops are graded zero to 10, 10 to 20, 20 to 30. And that's basically zero to 10 per pound, 10 to 20 per pound, 20 to 30 per pound. But the Japanese, as they do, grade them much more consistently. And so it's zero to two, two to four, four to six, six to eight, eight to 10. And that tightness of grading makes an enormous difference if you are a restaurant and you're trying to calculate your plate cost, right? So you want your plates to be consistent.

Starting point is 00:18:48 You can't be that one plate has four scallops, one plate's got six. And, you know, oh, well, I've got this one giant scallop. And so now my plate cost is thrown off. So that inconsistency, and scallops are one of, if not the most expensive per pound protein from the sea. And so it makes a big difference.

Starting point is 00:19:09 And so I basically made this whole pitch about, look, you guys can have consistent plating, consistent plate cost. And, you know, there was a lot more to it, but that message resonated and it closed the deal and I got the contract and it literally became our largest client. And I supplied all of Benihana worldwide, all their scallops. And I subsequently became basically the world's leading expert on Hokkaido scallops. Was it a known fact in the industry that Hokkaido scallops had these advantages? Nobody cared because they were taking the packaging that came from japan and they were just repacking it into american standards right and so it was just another source just like we got scallops from china we got scallops from chile from peru it was just another origin high quality

Starting point is 00:19:56 but the grading wasn't a selling point that wasn't a known selling point so what made you good i mean i have some we've spent a good amount of time together, so I have some guesses, but rather than guess, what do you think made you good at this job? I'm not afraid to sell. I think I have to start there is that I took it for granted that, oh, hand me a phone book. I'm going to start making cold calls. I'm going to get on the phone with people, try and sell them something that they never knew they needed. I think that was a big factor. And then, you know, I've got the gift of gab. I'm rarely at a loss for words.

Starting point is 00:20:29 I'm very good at adapting to people and meeting people where they are. Whereas I think a lot of people in sales are trying to bring somebody over to where they are. You got to meet the person where they are and understand what they need. And then craft your message and craft whatever it is you're selling, if possible, to meet the person where they are and understand what they need and then craft your message and craft whatever it is you're selling, if possible, to meet them where they are for the need that they may not even know they have, but you've identified. So I think that adaptability, you know, Peter had two nicknames for me. The chameleon was one and crystal meth was the other.

Starting point is 00:21:03 I have an extraordinary amount of energy and adaptability. So I guess I think a willingness to sell without fear. And then, you know, that high energy to tie up just a loose end here and bring this boomerang back to the initial question for a minute. So is Bruce Wayne to Batman as Peter is to Charlie Tuna? 100%.

Starting point is 00:21:26 They're one in the same. One of the same. All right. And Charlie Tuna, he was a squash player. Peter influenced me in ways way beyond business. Like his lifestyle, I had never seen somebody with that lifestyle. What was his lifestyle? Well, it was like, again, you know, he's an old hippie

Starting point is 00:21:45 who had been, you know, he was playing the long game. He had this little business and he loved it and it made, you know, a couple million bucks a year every year. And, you know, good times he made more and bad times, you know, maybe he made a million bucks, but it was a great business. And he'd just been chugging along, chugging along. He had no ambitions of scaling. You know, I came in, I'm fresh out of scaling. You know, I came in, I'm fresh out of college and business school. And I'm like, well, we can do this and we can, you know, automate this and we can do it. And he's like, look, shut up, kid. Just keep chugging. Okay. And he would take off. He'd go down to Belize for a month and he'd go, you know,

Starting point is 00:22:25 he'd a chalet on the edge of a cliff in the middle of nowhere in Gaspé in way up northern Canada. And he'd just go up and hang out at this chalet and, you know, watch whales break, you know, the surface. And he just, he didn't aspire for the things. I guess at that time, you know, I, you know, you look up to these people that you think are successful and you think, wow. And you try to model the way that they live their life or the things that they buy or mark as trophies of their success. And Peter didn't have any of that. He optimized for what I would say is freedom. That's how I've sort of digested it into my own life and what I've modeled. He optimized for freedom. Anyways, coming back to your original question, I go off on tangents because he's truly- Chris Smith. Yeah. So he got the Charlie Tuna moniker from his squash. He was a competitive squash player, and that was his nickname was Charlie Tuna. And he got me to squash. So what are the tenets of Charlie Tuna?

Starting point is 00:23:21 I actually meant to bring it because these tenets are like, you know, mantras to me, but it's a few sayings that either he identified or people that he worked with or customers that he worked with for a long time, sort of identified as things that he would just say a lot. And they're just these short little phrases that they'd get a certain point across. He had 10 of them. They were on the wall in the office. I've expanded it to about 15. I still say the 10, 10, it's a Charlie tuna because it just sounds better. But, you know, it's like, I'm not mother Teresa. I'm here for a profit because you get customers and they, so they're like, well, you know, can you do this for me? I really did it. And I think, well,

Starting point is 00:24:04 look, I'm here for business. If I was here to make friends, right. you know, can you do this for me? I really didn't, I didn't think, well, look, I'm here for business. If I was here to make friends, right? You know, we wouldn't be on the phone. We'd be meeting somewhere for a beer, but I'm not Mother Teresa and I'm here to make a profit unabashedly or don't be backwards about going forwards or what does that mean?

Starting point is 00:24:20 Well, people do things in these roundabout ways, like just be direct. Just say what you want to say. Do what it is you want to do. Don't dance around it. Don't beat around the bush. There's one which I literally, I've still to this day never understood, which was don't crowd the mourners. I don't know what that one meant.

Starting point is 00:24:42 Yeah, don't crowd the mourners. Okay. There's still some riddles unsolved. Yeah, yeah, yeah. That one I never got a clear answer to. All right. I feel like we were having sushi at one point, and you were like, something, something, like, in the whorehouse.

Starting point is 00:24:57 Oh, yeah, yeah. One of the better ones. You can't run a whorehouse without any whores. I mean, all right, on its face, this makes sense, but what did that mean? You know, in its original context, it's like, if we don't have enough inventory, we can't do business because it's an arbitrage deal. So if I don't have what the customers, we only have a limited pool of customers. Like we're not trying to be Walmart, right? So if I don't have what these people want, then I'm just losing business.

Starting point is 00:25:30 And so if you want to run a scallop shop, you better have scallops. If you want to run a domain brokerage, you better have the best domains in stock. It makes sense, but you'd be shocked if you look around and you examine failures, how often that's the case, that people are trying to run a whorehouse without any whores. Because generally, they're trying to avoid risk, right? They're trying to de-risk. I imagine some people listening would say, well, hold on a second. I keep wanting to call him Charlie. I guess that's fine.

Starting point is 00:25:58 But Peter ran a really tight shop. Tight shop. He seemed to carry much lower overhead and fixed costs because he wasn't vertically integrated like these competitors, which all makes sense. So they might then extend that to say, well, if you're running an arbitrage business, could you not identify the need and then source the inventory? Or are you just too slow? You've missed the window. Missed the window. Missed the window. You don't have it. It's a commodity, right? So you don't have it. The next call is your competition.

Starting point is 00:26:28 Very little differentiation. It's a commoditized product. So you must have to get pretty, I would imagine, to make that work. And maybe I'm imagining incorrectly, but pretty sophisticated with forecasting and prediction and so on. Because scallops, last I checked, don't last forever. So if you're holding inventory, it's not like you can sell the next Christmas. 100%. So I don't know how deep down this rabbit hole you want to go, but that was one of our

Starting point is 00:26:52 superpowers was another way that Peter has really influenced me was Peter had lived all over the world. He dodged the Vietnam draft and went to Namibia. And then he's lived all over the world and he's traveled all over the world, literally all over, everywhere. And he had these relationships that were just the most absurd relationships. Everybody had crazy nicknames. And in Chile, in Peru, we had- Pablo the Catch. We had Mr. Lucky in China and we had- Mikey the Iron Wrench. Crazy, really. And he just knew these people.

Starting point is 00:27:28 And he would call them up and he'd just say, what's it looking like in Peru? What's it looking like in China this year? What's it looking like in Japan? What's it looking like? And every morning, that was literally the first thing I did. And that's in terms of catch, type of catch. Or catch may not be the right term, but. Yeah. I mean, a lot of these guys, they came to appreciate Peter and his personality. He's

Starting point is 00:27:51 truly a character and the method, but you know, I would make these calls. I had a list of 20 people that I would call every single day. And I literally wrote out a report of what that person said every single day. And I presented it to Peter every day. And this isn't a fast moving business. And so generally speaking, whatever they told me yesterday is the same thing they're telling me today. And so it was, it was redundant, but what it did is it honed a whole bunch of different skills and it caused me to build a relationship with these people in a way that Peter had

Starting point is 00:28:23 built over an extraordinarily long period of time. And so it got them to trust me, it got them to know who I was, and it got them to share information with me that they weren't sharing with other people. And most other companies had a more local-centric focus on supply. So they knew what the catch was like in the North Atlantic, but they didn't know what the imported supply was going to be from China or from Peru or from Chile, where there's these massive aquaculture operations that just happened to be at that time really scaling up to match or now far surpass the domestic supply. And that allowed us to understand where price was going to go. When you say you got to have the horse to run the whorehouse, you don't have to have all of them.

Starting point is 00:29:12 You just need to know that the guy coming in the door wants a redheaded whatever, right? And so I need to know that the thing that's going to be short in the market is going to be 30, 40 size scallops, 20, 30 size scallops. I need to know what's going to be short because the stuff that's going to be short in the market is going to be 30, 40 size scallops, 20, 30 size scallops. I need to know what's going to be short because the stuff that's going to be abundant, I can get that readily. I will know the price readily. I won't get caught with my pants down on the price. And so I can do what you were saying before, which is like what we call the back to back.

Starting point is 00:29:41 But by having the stuff that's in short supply, I'm going to get the business because I'm going to have the thing they need. Even if maybe I'm going to be a nickel or a dime higher on the stuff that, you know, the other stuff that's abundant, I'm going to be the guy that's got the right price on the stuff they need that they can't get from everywhere. And so that was really our superpower was knowing where to fill the holes, which gaps were going to give us that advantage that would allow us to compete on the stuff we otherwise wouldn't have been able to compete with. We're going to move from tuna, as in the namesake of Batman slash Charlie Tuna. We're going to move from scallops to Hamoni Berrico. It's a good segue.

Starting point is 00:30:22 We're going to move from food to food. Okay. Where does this fit into your life story? I did a semester abroad in Australia where I met my now wife, who's German. And while we were dating, playing international love affair, she took me to Mallorca where I had Jamón Ibérico, Pata Negra. There's many different names for it. The Portuguese would tell you that the pigs are raised in Portugal and then cured in Spain. But traditionally speaking, With people nodding in the room.

Starting point is 00:30:55 Traditionally speaking, it's a Spanish ham from the black-footed pig. And at that time, in the very early 2000s, it was illegal to import it into the United States. And when I tasted this with my wife, my now wife, I was blown away. It was the best meat I'd ever had in my life. I couldn't believe it. And I was like, why don't we have this in the United States? And I was in the seafood import business. So I thought, I'm going to import this to the United States.

Starting point is 00:31:22 Backtrack to my college days. That was literally the emergence, mid-90s. It's the emergence of the consumer internet. I took a class learning about the internet. I thought, wow, domain names, amazing. I started registering them because I'm hyperactive. And every time I had an idea, I'd get a domain for it, not thinking that these would be valuable.

Starting point is 00:31:41 But anyways, coming back, I thought, I'm going to get some domains for this Hamoniberico thing. And I'm going to set coming back, I thought I'm going to get some domains for this Hamonibirico thing, and I'm going to set up a website and I'm going to start importing this stuff. So I got back to the US and that was my intention. I discovered that it was actually illegal. The FDA did not allow you to import this Hamonibirico because it's cured for 18 months. You know, it's a raw meat that's cured for 18 months in salt. And like French cheese, the FDA didn't designate it as fit for human consumption. So that was sort of that. And I put it in the closet and forgot about it.

Starting point is 00:32:13 And then a couple of years later, I'm driving to my office and I hear on NPR radio that George Bush is about to get the first Harmoni Berrico ever legally imported into the United States. And couldn't believe it. And I got to my office and I found out who the importer was. And I called him up and started talking shop. And I told him I wanted to buy a ham from him. And he was like, look, kid, I'm sold out for a year. I basically have a monopoly or he had a monopoly, you know, and these were like, I don't know, seven, eight, $10,000 legs of, of ham at that time. And it's literally, you know, it's a whole leg buying a thoroughbred.

Starting point is 00:32:53 Yeah. And, you know, so he was like, you have no chance, forget it, get in line. And, you know, we're talking shop and it came up that I had these domains and it was like his proverbial jaw dropped. And he immediately was like his proverbial jaw dropped. And he immediately was like, how much you want for those domains? And it was the first time, like I said, I bought a lot of domains at that point already, but never thinking, oh, these are valuable assets that I'm going to sell in the future. It was always like, oh, this is another lame brained idea that I'm going to try and build a business around that

Starting point is 00:33:22 I never got around to. And I didn't even know what to answer. And so I said, well, I want one of your hams. And he goes, no problem, done. And I was like, oh wait, that's too easy. And so I was like, and $5,000. And he's like, done. And I was like, well, you know, that ham's got to come from that first container, you know, George Bush's container. And he's like, done. And I was like, oh wow, okay. And you know, I kind of was like, all right, it's yours. And so, you know, I had a few of these domains and I transferred the domains to him on the spot. And at that time I had no idea how to do a domain transaction. And so I just took the leap of faith, transferred him the domains. A couple of weeks later, I got a coffin in the mail and, you know, the rest is history. That moment then gave birth to my whole domain business.

Starting point is 00:34:08 I realized that this little esoteric corner of the world, if this guy wanted his domains that bad, every business in the world is going to want or need their respective domain names. And so at this point, I'm still in the seafood business and I was making quite a lot of money for somebody in their mid-20s. And I just started backing up the truck and buying as many domains as I possibly could. Now, where or when does Test Diaz enter the picture?

Starting point is 00:34:40 Test Diaz worked for GoDaddy. And GoDaddy at this time, in early 2000s, they launched what they called the executive department or something at that time. They looked at their accounts and they were like, wow, some of these people have like thousands of domain names. was to reach out to these people that had more than 1,000 domains and figure out what they were doing with them. And most of these people knew what they were doing with them. They had a purpose. I did not. So anyway, Tess called me. And I was actually in my car.

Starting point is 00:35:16 I was driving up to my good friend JB's house in upstate New York, Quiet Please Farm. And I had a lot of time. And so she called me. She said, what are you doing with all these domains? And I was like, quiet, please farm. And I had a lot of time. And so she called me and she said, you know, what are you doing with all these domains? And I was like, I have no idea. Every time I have an idea, I buy them. And she said, well, you know, there's like a domain industry and there's people trading these things and you can monetize them. And I was like, well, I had no idea, you know, tell me more. And so literally I spent like three or four hours on the phone with her getting a download on that there's a domain industry and, you know,

Starting point is 00:35:49 an aftermarket and there's people on forums talking about these things. And there's different ways to, you know, park them and monetize them and Google will pay you for the clicks. And it was, this was all new to me, but it was fascinating. And so I then spent weeks as I do deep diving into this new world of domain names. And I got super fascinated.

Starting point is 00:36:13 At this point, I'm married and my wife thinks I'm crazy. In fact, everybody thinks I'm crazy because I've now spent a considerable amount of money buying domain names by that point. And basically, when I got married, my wife said, look, I'll live in the United States for four years, and then the shot clock is up. And then we're moving somewhere else. And the shot clock ran up. And it sort of ran up at the same time that I was doing this deep dive into this domain world. And what I realized was there was nobody playing

Starting point is 00:36:46 matchmaker between the people that had these domains, fascinating characters, right? Like literally you would be hard pressed to find an industry that has such a motley crew of extremely successful and by a variety of standards, people, but from just wildly different backgrounds, wildly different interests that have stumbled into this industry in completely different ways. And I decided to basically build a domain brokerage business to play matchmaker. And there was people trading amongst themselves, kind of playing hot potato in the domain industry, but there was nobody taking these domain names and selling them to the end users that ultimately could benefit most from them. And more importantly, playing educator between this nascent asset class and the broader business environment that I think recognized like, oh, this is an extension of our brand, but didn't understand why these things

Starting point is 00:37:45 might cost so much and why they're so valuable and the various benefits of owning them. And therein was born Media Options. And my wife and I founded it together. And I think it was maybe a year or two later that Tess became my account rep at GoDaddy, just going full circle here. And then ultimately left GoDaddy to come work for me. And I went from a lone ranger to plus one. And shortly thereafter, we moved to Panama. We left Rhode Island and moved to Panama. Just a quick thanks to one of our sponsors and we'll be right back to the show. This episode is brought to you by AG1, the daily foundational nutritional supplement that supports whole body health. I do get asked a lot what I would take if I could only take

Starting point is 00:38:35 one supplement. And the true answer is invariably AG1. It simply covers a ton of bases. I usually drink it in the mornings and frequently take their travel packs with me on the road. So what is AG1? AG1 is a science-driven formulation of vitamins, probiotics, and whole food sourced nutrients. In a single scoop, AG1 gives you support for the brain, gut, and immune system. So take ownership of your health and try AG1 today. You will get a free one-year supply of vitamin D and five free AG1 travel packs with your first subscription purchase. So learn more, check it out. Go to drinkag1.com slash Tim. That's drinkag1, the number one, drinkag1.com slash Tim. Last time, drinkag1.com slash Tim. Check it out. If we take a 30,000 foot view for a second, for folks who are unfamiliar with the domain slash domaining world,

Starting point is 00:39:33 and I would put myself in that category. Maybe I know the edges of the puzzle, but I really don't know what the entire thing looks like at all. So there's an aftermarket. There are auctions, expiries, dnjournal.com, dnforum.com, domainnamewire.com, expired auctions. Can you just give us an overview of what that world looks like? What are the main pieces, the main positions, so to speak? Like any market, it has a structure. There's a clear texture and structure to the market.

Starting point is 00:40:05 You have, let's say at the lowest level, you've got guys that are just really appreciate domain names and they're investing in domain names. Maybe they're hoping to strike it rich like a lottery ticket. Maybe they're like me and they just have eccentric ideas and register domains around them. Maybe they drank too much and thought they had a clever idea that they regret in the morning.

Starting point is 00:40:25 But there's just people that are sort of collecting domain names. And then you've got people that are really taking it seriously, investing into domain names, and they've got varying methodologies. Like I've got one of my very good friends, Yanni is super methodical.

Starting point is 00:40:40 He's a robot. He's got algorithms. There's very little emotion or anything that goes into his formula. Whereas I'm kind of the opposite. I'm basically 100% on instinct. And then I back it up with data. But I primarily am operating from instinct.

Starting point is 00:40:54 But either way, we utilize primarily the same tools as like the SEO industry to sort of gauge what the total addressable market of these domains is. And so there's a whole bunch of different tool providers in the domain industry to sort of gauge what the total addressable market of these domains is. And so there's a whole bunch of different tool providers in the domain industry to sort of uncover who owns a domain, trying to evaluate a domain based on a bunch of data points. There's a bunch of different tool providers. Then you've got forums where these people meet less today. It's less relevant today. I would say Twitter is kind of the X. Another segue we can go down. But X is really where the material domain world is meeting these days.

Starting point is 00:41:32 And there's just a lot of these investors coming at it from a lot of different angles. And then you've got some of the names that you mentioned, domain name Wire, DN Journal. I would say those are the two most prominent. They are covering the news. These are our true journalists for the domain name industry. And they're talking about policy changes.

Starting point is 00:41:52 Domain names are governed by ICANN, which is the multi-stakeholder, non-governmental organization that basically governs domain names. And remarkably important organization, by the way, that very few people know even exists and more people should know that they exist. But there's all these different layers, right? And then you've got, as the industry evolved through the late 90s and then the early 2000s, these good domain names get what we call type in traffic. It's just inherent traffic.

Starting point is 00:42:23 People just inherently go to these domain names. Prime.com. Yeah. Prime.com. You know, people want to go to Prime at Amazon. They just type in Prime.com. And, you know, we helped Amazon to get Prime.com for that very reason, because tens of thousands of people were going to Prime.com every day and not finding Amazon. And so if you own these domains, though, you can park them with Google or Yahoo on their parking feeds. And they display keyword advertising. And then when people click them, you earn a couple cents, sometimes more. And at scale, that can be considerable revenue. And that used to be the primary business model in the early 2000s.

Starting point is 00:43:06 Was capture that traffic, hope it leads to click-throughs on your advertising, and then get paid by Google. 100%. Just out of curiosity, because I know I'm not the only person who knows what it is now. I'm not giving a real example, but I'm typing something like Google really quickly. And I type an extra O. Google three O quickly, and I type an extra O. Google with three Os, and I land on that page. How much do you think the owners of some of these misspellings pull in? Okay, I'm going to pause for a second, because this is a really important

Starting point is 00:43:37 point that I want to make. I would say if your audience got one point from me today, I really want it to be this. There is a very clear distinction between a domain investor and a domain squatter. The guy that owns Google with three O's is a squatter. He is the person, he, she, whatever, is the person that gives the domain industry a bad rap. In the late 90s, in the early 2000s, that is worn off.

Starting point is 00:44:05 It still resonates, but it's two thousands that is worn off. You know, it's still resonates, but it's mostly worn off at this point. But in the early days of my business, that was the biggest hurdle was like, you're just a dirty domain squatter, right? It was like the fact that somebody was an investor in domain names was a negative connotation. And funny enough, some of the biggest domain investors are, you know, famous VCs that are funding the companies that are accusing domain investors of being squatters. But anyways. Really? So there are VCs who own just.

Starting point is 00:44:31 Oh, yeah. Spreadsheets full of domains. You know, more targeted, super high quality, you know, maybe tens of domains, but really high quality. Are they holding them for portfolio companies or are they looking to. You know, I for portfolio companies? I don't know. Can I play stand-in for the listeners for a second? Sure. All right, so this differentiation, I think, is important to underscore.

Starting point is 00:44:55 So squatter versus investor. Yeah. Do investors still buy URLs that represent trademarks owned by other people? And if so, how is that reconciled? There's always going to be bad actors, but it is a very, very, very small fraction of what it used to be.

Starting point is 00:45:11 We've got cyber squatting laws now. It's quite punitive, $100,000. If you get sued in federal court, it's $100,000 per name penalty for infringing on somebody's trademark cyber squatting. There are also much cheaper, faster, and easier mechanisms for recovering domain names and infringing on your trademark called the UDRP, Universal Domain Resolution Protocol. Basically, there's three elements,

Starting point is 00:45:36 and if you can prove those three elements, the domain is going to immediately get transferred to you, okay? And it's only going to cost you about, let's say, $2,500, maybe three grand if you go for a three-person panel for this arbitration. And they're going to make a decision. The owner gets to respond if they choose to. And in most of these cases where it's a clear trademark infringement, they don't even respond. And then that's it. You're going to get the domain name. And you don't need to know the identity of the holder for that. Nope, you don't. Got it.

Starting point is 00:46:08 And so there's very strong mechanisms, both preventing and let's say clearing the market. There's very little upside to doing this anymore. And so, like I said, there's still bad actors, but it's a very small problem compared to what it used to be. When did you put up your shingle and start the company? 2008. Okay. I'm no historian, but 2008 doesn't sound super early in the domain game, which makes it more interesting to me because it's not like day one of Google AdWords

Starting point is 00:46:41 where you're shooting fish in a barrel, right? There's a point in time where it was like, oh yeah, we can just look at the dictionary and go buy a bunch of dictionary words. Totally. But at this point, it would seem like you're buying or matching or both. Maybe you could explain the business model then, what it looked like. Which is incredibly interesting because it raises the question of how to value or how to determine a reasonable price, acceptable purchase price. And I wouldn't know how to begin doing that for something like Nor would almost anybody else.

Starting point is 00:47:14 Like x.com, right? I don't know who would use it for what. I know it's single letter, okay. But could you walk us through what the business model was at the time? You're coming in clearly not too late, but certain low-hanging fruit, most of the low-hanging fruit have been, a lot of them, removed. All. All, right. And so then how do you determine a fair price? I'm kind of taking a wild guess here, but just's, you know, just for emphasis, it's literally probably 95, 98% of our business is domain names that were registered prior to 2000. Okay. So in 2008, when I, you know, as I said, hung up my shingle and started the business, I am super late to the party. Now I have started accumulating some domains, but most of them weren't really great

Starting point is 00:48:03 at that point. But I understood that it was going to be a very capital-intensive business, and I had already spent a lot of capital. And if I wanted to continue this hobby, I needed to generate cash flow to support it. So that was one of the premises of starting Media Options. So then that premise worked. We started successfully selling other people's domain names using our commissions to then fund the acquisition of better domain names for ourselves. People would come to you and say, I have fill in the blank. Oh yeah. I mean, you're talking.com and I would like to sell it, but I'm not sure how to do it. A line out the door, right? So there's a handful of domain investors that understand what they've got

Starting point is 00:48:46 and they have no real eagerness or intention to sell except when somebody makes them. But everybody else is literally, they buy a domain and they expect it's going to sell the next day, right? And so anybody that can help them achieve that unrealistic objective, they are banging on the door.

Starting point is 00:49:08 So I get so many emails every day of people that want me to sell their domains. So endless supply of inventory to sell. So I start banging on doors and basically playing fake it till I make it because nobody had really done this before. How did people find you at that point? Most of the people that own the domains I'm selling at that point, that's no longer the case. But at that point, most of the domains that I'm selling are owned by domain investors, right? And so I'm meeting these people on the forums. There's the end journal, which does

Starting point is 00:49:39 this weekly sales report. And so today I'm like the most discreet person you're ever going to meet. But at that time trying to build a business, I was, you know, every time I make a sale, I would announce that sale. That would get published on the forums or. Yeah. It'd get published in the journal that was sort of a source of pride was like, Oh, look, my sale got published in the journal this week. And people would see that you sold a domain for a good price and then double down on, you know, so that was how the people that owned the domains were finding me. Finding you, got it. And I'm finding the people that I was trying to sell them to, okay?

Starting point is 00:50:10 Very rarely are they coming and finding me. It did happen, right? Lightning strikes. Do you still remember any of your initial sales where you're like, holy shit, I think this could be a thing? The sale where I thought, wow, okay, I'm really, I think I'm going to be able to make this into a business was pizza.net. Okay. Okay. This is a great example because it seems like there are a lot of people you could potentially sell that to. So walk us through pizza.net then.

Starting point is 00:50:39 Pizza.net was a unique case. Pizza.net was a very famous domain because it was highlighted quite prominently in the movie, The Net with Sandra Bullock in 1994. Really? Yeah. So this is a 1994 movie, okay? And Sandra Bullock, first time anybody has ever seen anybody order a pizza online on the internet. Sander Bullitt goes to pizza.net and orders a pizza online. And so pizza.net, you know, man, it's another rabbit hole, but pizza.net was actually has prior art on a whole bunch of patents. So Google has the patent on, here's your IP.

Starting point is 00:51:25 We're going to provide you, you search for pizza. We're going to provide you the pizza restaurants that are within a certain distance around your IP address. Okay. They have a patent on that. Pizza.net was doing that prior to Google filing that patent. And so Pizza.net technically. So the company that owned Pizza.net was doing that type of sort of proximity... Yes. Yes. And so the company was gone, okay? But the owner of the

Starting point is 00:51:54 domain, which he's also a fascinating... That's another fascinating story. But I don't recall how he found me. He was the guy that literally strung the internet cable up the entire East Coast of the United States. So he literally put in the actual hardware that created the first internet network on the East Coast of the United States. Adam, I can't remember his last name. Adam something. Put it in the show notes. We'll also put the rest of the tenets of Charlie Toon in the show notes for people who are wondering where those might be found. At the time in the early 90s, when he bought this domain, I want to say it was registered in 92. Mind you, most people didn't even know the internet existed until about 94, 95. Regular home adoption didn't really happen until 96, 97. But at that time in 92, 94,.NET was actually the

Starting point is 00:52:47 preferred, most people thought.NET because most of the people using the internet were network providers. These were ISPs. They were, you know, it was a read only or write only. It was mostly tech, not in the way that we think about it today, but like really hardware tech companies that were utilizing the internet at that time, other than just putting up a splash page, like a business card and they were using.net. And so, you know, he had a lot of very, very good.net domain names at a time when he could have registered any of them in.com. He actually is, is the guy that he originally registered. You know, you brought up x.com. There's three one-letter.com domains in existence. Okay, that's it, three. It's Z, Q, and X. But Adam- Why are there only three?

Starting point is 00:53:31 So I'll tell you the story. So Adam actually registered all other 23. So numbers aren't allowed. Single numbers are just not allowed for security conflicts prevented by ICANN from being registered. So he went and registered all the other one-letter.com domain names. But because he wasn't using them, ICANN then decided, oh, this is a bad idea. Nobody should be able to have these one letters. And so they pulled back all but the three, which they grandfathered in because Nissan was using z.com for their 300Z car, which is quite popular at the time. I think it was Quest Communications was using Z.com for their 300Z car, which is quite popular at the time. I think it was Quest

Starting point is 00:54:05 Communications was using Q. And Elon, as it were, was using X at the time. It was actually originally owned by a lawyer. Elon bought it from him prior to merging with Peter Thiel for PayPal. So those three got grandfathered in and the rest got pulled back. Basically, I guess I have read quite a bit about it. I think the way I can was thinking about it was like, you know, maybe there was an element of security. You know, they're kind of a socialist organization. And so they probably thought it was unfair for any one company to dominate a letter of the alphabet.

Starting point is 00:54:38 But for a variety of reasons, they clawed them all back, except for three. Yeah. Pizza.net. So long story short, I sold pizza.net. I think it was for like $120,000 at the time, which used to be a lot of money. And I earned probably a $20,000 commission on that. Probably the owner made $100,000 net more or less. And it was a lot of money for me. I had this mantra at that time. I had just left a job where I was making

Starting point is 00:55:05 about 400, 300, 400 grand a year consistently, and I was 26 years old or 25 years old, whatever it was, and I was making a lot of money, like way more than any of my peers, and I literally jumped ship, moved to Panama, started this brokerage business, and I had a limited amount of savings because I'd spent most of it on domain names, and I had a limited amount of savings. I'd spent most of it on domain names and I had a

Starting point is 00:55:26 limited amount of savings. And it was basically just enough for us to last one year. I had this mantra of every single day, five days a week, every day, I need to make $250 profit. If I don't make $250, then I am already falling behind the eight ball. But if I can make $250 every day minimum, then my business will survive. How did you arrive at that number? I calculated what my annual expenses were going to be in totality and divided by the number of business days. And this is another thing, it came from Peter.

Starting point is 00:55:59 It was like, look, keep your expenses low. All of my competitors, they were doing sort of different things, you know, but they were all trying to be very technical about it and build scalable businesses and lots of people and lots of technology and huge overhead. And I had, you know, at that time, I had basically no overhead. And so I was chugging along and doing whatever it took. Like I would give away a domain name just to make $250. I would say it didn't matter. Like, even if I knew I was chugging along and doing whatever it took. Like I would give away a domain name just to make $250. I would say it didn't matter.

Starting point is 00:56:27 Like even if I knew I was doing something that was going to be harmful to me, literally I was not going to end my day until I made $250. And if I didn't make it, which was very rare, the next day I had to make not double, but triple. So it was like just punishment. It was like, okay. So I really stuck to that. And I think that that was a very powerful discipline for me early in that first year. In brief, because I know a lot

Starting point is 00:56:52 of folks listening are going to wonder, why Panama? We originally planned to move back to Europe and the sky was falling. And so we thought we really hated being in the US where it was really just being inundated with bad news all the time. And we kind of just thought, okay, well, it's going to just kind of be more of the same in Europe. Germany would have been the obvious next step. We kind of said like, okay, we really want to escape that environment, particularly because we're going to launch a new business. I need some positivity. Like I don't, what I don't need is like constant negative vibes around me

Starting point is 00:57:25 all the time. The other thing was that we left in November. And so it was like a bitter New England, cold winter, horrible cold. And I remember my wife got stuck. She had a manual car. She was driving up a hill in Providence and she got stuck in the snow and i can imagine the german curses yeah and so anyways it was like look we're doing this business that we can do from anywhere and so let's go somewhere warm and i was like yeah let's go somewhere warm and so we kind of explored all these different places you know we'd visited a lot of places in the caribbean and we'd gone to central america and we'd you know i had been to panama actually a lot of places in the Caribbean, and we'd gone to Central America. And I had been to Panama, actually, a couple of years earlier because of a friend of mine from college was Panamanian and invited me down.

Starting point is 00:58:12 And so Panama just checked a lot of boxes. It was on the US dollar. Most of my business was going to be in US dollars. So that eliminated sort of the currency friction of volatility. Didn't even think of that. Yep. That was big. That was a big reason.

Starting point is 00:58:24 It was very safe. At that time, Panama was the fastest growing economy in the world from a GDP perspective. I think it was 13.5% GDP growth in 2008 or 2009, whereas China was number two with like 11%. So huge GDP growth. Why was there so much GDP growth? Is that like banking sector or no? Well, yeah. So the banking sector was growing rapidly. The Panama Canal was expanding and we were basically really, let's say for that first decade of the 2000s, that was kind of peak globalism, right? It was like, wow, everybody's doing trade with everybody. That got sort of short-stopped with the financial crisis, but things were booming. So anyways, Panama ticked all the boxes.

Starting point is 00:59:05 That was really why we landed on Panama. So you're in Panama, pizza.net. Holy shit, this is going to cover a lot of $250 days. Totally. Right? This could be a business. It was super important that I was hyper-focused on earning $250 a day. You're going to have a hard time really like building a big business if your focus is on making $250 a day. But it was critical for that first year to have that small goal and be achieving it regularly. But then when I got my first like bigger win, it gave me the ability to take a deep breath and then say like, okay, I think this business is going to work and I can start thinking bigger. And, you know, I lost the discipline of like the $250 a day, but I started hunting bigger fish

Starting point is 00:59:52 with the inherent confidence that came with achieving this discipline of, you know, hitting these small targets. So hunting bigger fish, this then brings us back to the question of valuations and acceptable cost. How do you think about this? Andrew and I got into the weeds on domain valuation. We really got into the technicalities, which is super interesting. So be sure to stick around to hear Andrew's answer related to how do you actually determine an objectively defensible valuation for domain names. Fascinating topic, but it got quite detailed, so we moved it to the end of the conversation.

Starting point is 01:00:36 So stick around. What I wanted to ask about is something that people might find surprising. And this is a note that I have in front of me. And I was surprised to see this. Startups in particular should not buy their domain name. They should lease the best possible.com domain name for their business with the option or path to buy later. Can you elaborate on this? Yeah, yeah. Because this is a big decision slash important decision slash terrifying risk for a lot of startups.

Starting point is 01:01:11 So I'm glad you said what you just said. Or they wait and then they get extorted is a strong word. But I mean, they really get bent over the barrel because they purchase the wrong. Extorted is not actually the worst case scenario. The worst case scenario is that they no longer have a path to ownership for their exactbrandmatch.com. That's actually the worst case scenario. That's a much worse scenario than we have to pay some exorbitant fee to get our domain name. And I'll explain why. So about 2014, 2015, we started seeing really like a parabolic rise in the value of domain names. I don't even know really what to attribute it to, but there was a sudden sort of inflection point

Starting point is 01:01:54 where more and more investors, when I say investors, I mean really primarily VCs, as well as startup founders. And I think the startup founders part, I understand. That area around 2012, 2015 was sort of a lot of the guys that had a win or, let's say, might have had a win, but then didn't sell fast enough and the dot-com boom happened. But a lot of those early dot-com successes were coming back for their second shot in that sort of time period. Yeah, it's true. I can for sure confirm that because I was in Silicon Valley at the time, and a lot of guys who had their first wins like 2007, 8, 9, or maybe that's when they started a company and they had just taken some secondary off the table. So maybe they hadn't had an IPO, but they were flush with cash.

Starting point is 01:02:45 And they were looking to build more things. I saw this a lot. Like anybody who's successful, they learn from previous experience. And a lot of them understood that, OK, I launched on this silly name. And I might have gotten lucky and been successful because the market wasn't crowded. But now the market's crowded. And now there's a million people that want to compete with me. And there's a lot more resources to fund those people that want to compete with me. And so I need a strategic advantage that my competitors can't,

Starting point is 01:03:15 that gives me a moat. And a domain name is one of those advantages. And so a lot of repeat founders, this is a trend that I see. First-time founder pushes back a lot on buying their exactbrandmatch.com. They see it as a risk, as you said. Most people perceive it as a risk. What I would tell you is that it's actually a de-risking. Well, I want to make sure we talk about leasing. This is why we're going to circle back to this. Now, this is actually directly leading into the leasing.

Starting point is 01:03:41 Let me just strongman this a little bit. If somebody is in a weak cash position, I mean, it could be risky to overpay in the early stages. Sure. But this is where it's going to dovetail into the leasing thing. Okay. Because I think regardless of the cash position that you're in, not regardless completely, but within a realm, it's a better strategy, the leasing, rather than an upfront, just all-out purchase. And so around that time, 2014, 2015, domain names really started to rise. And I was sort of telling you what I attribute that to. But as the values started going up, it became harder and harder to sell these things.

Starting point is 01:04:25 There was less people that could afford to buy them. And there was some companies offering financing, but at very high rates and not super attractive to most businesses. And so I was trying to come up with ways to increase the pool of potential buyers and increase my ability to close sales. And so I thought, well, we're all, I say we're all, because I also own a lot of domain names. We're sitting on these domain names that we all know are really amazing assets.

Starting point is 01:04:56 They keep going up in value, but they're so underutilized sitting in our portfolios. And really the whole parking thing, which used to be big business, like we used to make real money from Google with parking, but around 2008, 2009, that started, you know, it's been a downhill slope ever since. We used to get the lion's share of the revenue and now we get peanuts. So as the values went up, sales got harder. And I came up with this idea of like, well, why don't I just lease you the domain? I'll give you a fixed price option. So you have an exclusive option to buy this domain. Nobody else can buy it. Even if somebody shows up and says, you know, I'll give you $10 million to that domain that you, you know, lease to this guy for $1,000 a month, nothing I can do about it. We use escrow.com as

Starting point is 01:05:43 one of our biggest partners. It's a third-party escrow service, which I would encourage anybody doing a domain transaction. That's, in my opinion, the only, maybe you can use a lawyer, but other than that, it's the only safe way to conduct a domain transaction. And it used to be owned by Fidelity, and then it was sold to a private guy, and then that guy sold it to Freelancer, which is a public company from Australia, Freelancer.com. They're the sole owner of the company now. Anyways, we're going to put the domain in escrow.com. That way, no matter what somebody else offers me, no matter if I change my mind, there's nothing I can do. Unless you,

Starting point is 01:06:17 as the person leasing the domain, breaches the contract that we enter into, there's nothing I can do. You keep making your monthly payments, you ride off into the sunset. You might not even ever have to talk to me again if you don't want to. Quick question. So with escrow.com, who mediates a dispute where you say that- It goes to arbitration. Okay. It goes into arbitration. Yeah. Third-party arbitration. They organize all that or is that something you guys organize? I mean, I am their number one client. I've done hundreds and hundreds of millions of dollars in sales.

Starting point is 01:06:48 And knock on wood, I've never one time ever had a transaction go to arbitration. Right. I'm not saying, but. Yeah, if it were. If it were, it goes to a third party forum, arbitration forum. And they will basically organize that. Because they're the ones holding the domain. So they've got an interest in sorting this out as quickly and amicably as possible.

Starting point is 01:07:09 And so they hold the domain. There's usually a payment upfront, which basically buys you an option, which in the world of finance, like any other option, you have an option to purchase this domain at a fixed price for a fixed period of time. I generally default to five years. I think that's a great runway. Most businesses at a period of five years are either going to make it or break it. It's going to be binary. At the five-year point, they know they've got a business and they're raising either more funds or they're profitable or they've achieved some level of

Starting point is 01:07:41 scale, but they either have a business or they don't. And so at that five-year point, they have, and they can execute at any time during the lease. They can execute after the first monthly payment if they want to. But within that five-year period, they have a fixed price option to buy the domain exclusive to them. And then they have a monthly lease. And so generally, rough back of the napkin math, the way these things usually fall is like somewhere around 5% could be 10%. The bigger the value, usually the numbers come down. The lower their percentage. Yeah. So it's over that five-year period, you mean?

Starting point is 01:08:20 Yep. So the purchase option, and it's important that the startup have some skin in the game. Oh, I see. That's the initial option cost. Yep. Not the total cost over the five year. No, no. It's going to be the initial option. Get some skin in the game, buy yourself an option, and then you've got a lease component.

Starting point is 01:08:38 And the lease component is going to be usually be like half a point, right? So if it does that. Does that option upfront payment act as an advance in the case that you purchase? In most cases, yes. So generally speaking, we apply that option fee. Let's say that you approach me, you want to buy a domain. That domain is $100,000. We agree to one of these lease deals. Maybe you're going to put $5,000 or $10,000 down upfront, and then you're going to put $5,000 or $10,000 down up front, and then you're going to have a $90,000 or $95,000 fixed price option to buy. And then you're going to have a lease component. And the lease component is a true lease. The payments don't go towards the purchase price,

Starting point is 01:09:16 but it's half a point. So if it's a $100,000 domain, you might be paying $500 or maybe $1,000 a month. So it's a half a point or a point a month, which is going to get the owner of the domain a very reasonable conservative rate of return, call it 5% to 12% rate of return, which is going to account for inflation and account for the risk. And you're going to have the opportunity for less than a cost to keep your floor clean to operate on your exact brandatch.com from day one. And so that's the first element of de-risking is that, number one, you're never going to have to rebrand, which is a very, because of SEO, because of technical challenges, because of

Starting point is 01:09:57 word of mouth and a whole bunch of different things, a rebrand while you're at stride is very difficult to pull off and it leads to all sorts of messiness. Generally speaking, it's going to cost you somewhere between, depending on the complexity of your organization, between $10,000 and $40,000 per employee to do a domain name rebrand, to move from one domain to another one. Particularly, it gets higher and higher and higher the later stage you are in your organization, the more complexity you have. So you are leasing the domain. You look like you're a serious business right from the get-go. You're not. Try this or get that. So question for you on the sell side, because now I'm super interested in this, because now I'm

Starting point is 01:10:42 thinking, huh, are there people who just have a stable of domains and they treat it almost like, and this isn't a perfect analogy, but like a fixed income portfolio where they're like, I'm not in the domain selling business, I'm actually in the domain leasing business. But to run the math on that model,

Starting point is 01:10:57 if you were in that position, you would want to know what percentage, just so you can forecast properly, you'd want to know roughly what percentage you would want to know what percentage, just so you can forecast properly, you'd want to know roughly what percentage you would expect to convert to buyers at the five-year point. Do you care though, really? I'm curious what it is.

Starting point is 01:11:14 Okay, so this is literally one of my favorite topics. This was part of the whole revelation of creating this was I was sitting back and I was thinking to myself like, all right, I've got about 5,000 really good domain names. Let's just take the top 500. These would all be domain names that at an absolute minimum, you're talking about $100,000 and that would be cheap.

Starting point is 01:11:35 So $100,000 and up, some of these are eight figures. Some of these are seven figures. Some of these are mid six figures, blah, blah, blah, right? But $100,000 to many millions of dollars in value. The price I would expect to sell them for. If I just took the top 500 domain names and I, let's just say I'm giving them away. I'm going to give away all of them for 500 bucks a month.

Starting point is 01:11:56 That's $250,000 a month in totally passive income. And when I say passive income, like you'd be hard pressed to find more passive income, right? Because it's not like a real estate portfolio where you got to once in a while, you got to piss off 10. You got to fucking deal with it. Yeah, you got to deal with broken pipes and electricians and you got local and state real estate taxes and you got that, that, that, that, that, that, right? What you get gross is very different than what you get net and not to mention the time investment. So I laugh when I hear people in the real estate business talking about passive income, but it truly is passive income. It's literally

Starting point is 01:12:34 set it and forget it. I literally hand the domain off to escrow.com. The servers get pointed to the person leasing it. And I get a notification once a month that the payment was received. End of story. That's it. So that's a pretty good gig. When I did that math and I was like, wow, I like those numbers. It got me pretty excited. And I started to pursue this. And I talked to GoDaddy and I talked to some other players in the industry saying, why don't we promote this as the way that companies should sell domains or acquire a domain? And from there, the concept evolved in my head to the point where it's a no-brainer. Even if you have the money, why lay out the cash if you can lease it? Try before you buy. Even if you know you want to buy it and you have the money to buy it, you probably have a better use case for the

Starting point is 01:13:23 cash flow. It literally is going to cost you, in most cases, less than you pay to keep your floor clean in your office to have this domain name. The lowest paid person in your company costs more than your company's branded domain name per month. So it's a no-brainer, in my opinion, for almost everybody. When you go to raise funds and you go to your VC VC being, I am, you know, Vita.com. I'm an investor in a company called Vita. I sold them the Vita.com domain name, which is a good segue into another element of this that you sort of referenced. But it's a lot easier to raise capital going and saying we are Vita and we have Vita.com

Starting point is 01:13:59 rather than we're TriVita or we're Vita.io or we're Vita.xyz. You're not a serious company. It's like you're on training wheels. And so at some point, and most of the smart VCs know this, at some point you're going to have to upgrade because there's a ceiling. You'd be hard-pressed. There are a few exceptions,

Starting point is 01:14:18 but I think you'd be hard-pressed to tell me a company valued over a billion dollars that isn't on a.com. You'd be pretty hard-pressed. And I think there's only one Fortune 1000 company that is not on a.com. So at some point, for a variety of reasons, you're going to hit a ceiling if you do not have your exact brand match.com. Maybe it's because you want to go public and your investment bank, which was the case with Facebook, when they wanted to go public, the investment bank, whoever it was, the auditors, whoever it was, came in and said, look, you guys need to own all your IP before we're going to take you public. And so

Starting point is 01:14:55 last minute, they had to go out and buy FB.com from the American Farm Bureau, and they paid $8.5 million for it because literally a banker told them they can't go public until they wrap up this IP. Or maybe you're going to raise your next round of funding. And your VC says, look, if you don't have your dot-com at this stage, it's a huge risk. We're looking for 100x here, right? We want you to be a $10 billion company or $100 billion company. And you can't do that without your dot-com. And so if you don't get it at this stage, then we don't know what it's going to cost later

Starting point is 01:15:27 or you might not be able to get it later. And they realize that that's an inherent risk, right? So there's a bunch of advantages, let's say lubricating the fundraising process, de-risking that process in the mind of the investors, as well as the downside risk of not doing so and looking like you're not serious or you have a short-term vision or you're not committed to your brand. Vida, you mentioned you're an investor and

Starting point is 01:15:53 you said that relates to another element of this. What is that other element? I mentioned that just because Stephanie Telenius, who was early employees at Yahoo, at PayPal, and I think 2012 Woman of the Year in Technology. Phenomenal founder. She approached me to buy Vita.com. She didn't want to pay- V-I-T-A. V-I-D-A. Okay, V-I-D-A.

Starting point is 01:16:14 Yeah, the Spanish word for life. Yep, got it. Okay, she was building this health tech business and she wanted to buy Vita.com and she understood. I mean, she had worked for and worked with a lot of Silicon Valley's most famous founders and VCs. She was committed to owning Vita.com and she didn't want to pay the price. You know, I won't get into the numbers, but she didn't want to pay my price.

Starting point is 01:16:35 I love that. It was one of my favorite domain names. You say that to all the girls. Yeah. This one's my favorite. So we're working through ideas on how could this work. And I'm, if anything, I'm extremely open-minded. And so I was just throwing spaghetti against the wall

Starting point is 01:16:53 to see what would stick. And I was like, look, give me a piece of equity in lieu of cash. And she was like, oh, that's an idea. And so she went back to her board and they came back and we did a deal. There was some cash. There was, you know, I think there was some cash. I think there was some

Starting point is 01:17:05 milestone cash payments and there was a small piece of equity valued at precisely that delta. There was no funny business. I didn't increase the price. I think it was just, we're going to make up for that delta between what we're going to pay you in cash and what you wanted in cash with equity. You say milestone-based cash payments. What type of milestones? Or hypothetically, was it like we raise this round and we give you a little more, then we raise this round, we give you a little more? Or even just as simple as time. I see. Your one, your two.

Starting point is 01:17:32 Payment schedule. Yeah. And the leasing idea triggered in my mind that, wow, I can actually act like a venture capitalist, but instead of putting capital money into these companies, I can treat these domain names as capital. And interestingly, I get the best position on the cap table because in my contracts, if you fail, I just claw the domain back because the equity goes to zero. That's an important clause. Yeah. So it doesn't always work. I mean, it depends on who the company is, who the founders are, what are the chances, you know, it's a negotiation like anything else. But generally speaking, we've got a clawback clause.

Starting point is 01:18:15 Otherwise we need to, you know, mark up the domain, you know, to account for risk, but we started doing that. And so now, you know, I don't know, we've got quite a number of, you know, startups that we have a piece of equity in that we've literally invested in, but we didn't invest cash. We invested a domain name. In some of them, I invested cash on top because I was excited about the opportunity. I've thought about doing this with the podcast occasionally,

Starting point is 01:18:39 just in a sense because I do enjoy the startup game at times. I don't want to do it full-time. I don't want, at this point, to have a fund or anything like that. I just don't want LPs to deal with any of that babysitting, frankly. But if I have, as you do, for instance, a competitive advantage in spotting things that could become very interesting. So when someone comes in and you learn about a company

Starting point is 01:19:07 that perhaps hasn't launched or hasn't made that quantum leap, but they're on the cusp of having bankroll to potentially buy something, where you have a conversation and you realize they're very strategically-minded, analytical, like this founder you mentioned. You're like, huh. Especially with that clawback,

Starting point is 01:19:26 that's interesting as a diversified business model. It's a lot more interesting than a domain sale. It's like, oh, I get to come along for the ride. So this comes back to another thing, which is that I actually fundamentally believe that we are still in the early stages of domain names and domain name value, early stages of digital commerce and the internet. Most people in the world have been online for less than 25 years. It's a pretty short period of time. As we see commercial real estate sort of dying and all the distress in the commercial real estate,

Starting point is 01:20:01 we're seeing the digital real estate, boom. And there's a direct correlation there. I would say a causation. So again, what is a domain name? It's the place where you meet your customer. It's the only place that you own that you meet your customer, where it used to be the retail store or the office or the whatever. Something brick and mortar, now it's digital. And that digital place where you meet your customer is a domain name. Now, some people have argued and they've for many years, I've heard everything. Originally it was like, oh, I don't, I remember when Absolute Vodka launched the first billboard campaign where they didn't advertise their own domain name,

Starting point is 01:20:42 they advertised their Facebook page. And I remember seeing that billboard and thinking to myself, how stupid. You are literally at least, I don't know, 20 cents. I'm pulling a number out of my head, but like it's gotta be 20, 30% of the equity that you're buying with that billboard is going to Facebook. And then when the customer goes to Facebook, you don't even own that relationship.

Starting point is 01:21:03 You don't own the data. You don't own the relationship. You can be shut off at will. Nothing you can do about it, right? And that was before cancel culture. Now it's like a serious problem. I chatted with this guy ages ago. He was also sort of a snake eater in the shadows, not in a bad way, but he was very discreet. He was very ethical, but he had these Facebook pages. He would buy Facebook pages that were doing well, and then 10x, 20x these pages. And they weren't exactly roll-ups,

Starting point is 01:21:34 but he would accumulate these things. And he had these portfolios. And one of them was just minting money. I can't remember what it was, but it was just millions and millions of dollars a month. And I asked him what it was like having and running that page. And he said, it's like having the most profitable McDonald's in the world on top of an active volcano. He's like, 100%. Because I just cannot predict what is going to happen.

Starting point is 01:22:01 You know it's going to erupt. You just don't know when. All right. I want to segue here for a second. Speaking of branding, fuckyourself.com. Why did you buy this? This is remarkably timely. As I alluded to earlier in this conversation, I get literally thousands of emails a day. Okay. So I am like, I don't know, maybe there's somebody out there that gets more, but I'm

Starting point is 01:22:22 kind of like one of the world's power users of email. I get roughly 2,500 to 3,000 emails a day. I don't use a spam filter because really in my business, I can imagine a lot of the legitimate emails are kind of indistinguishable from what would get flagged. Oh yeah, absolutely. Just full of keywords that are going to get flagged. A hundred percent. So I gave up on spam filters years ago and I just bite the bullet and I've tried a million different things and always there's just a some degree of loss I'm not willing to accept.

Starting point is 01:22:53 And so I just literally muscle through it every single day. And it's really the only thing in my life that I'm still, I'm captive to. I've really optimized my life for freedom, except email. Email is still my ball and chain. So at some point, very early, it gets tiring. You get a lot of crazy people and a lot of just garbage. And so somebody presented me with fuckyourself.com and I thought, wow, I want to buy that domain just to have the email address, goatfuckyourself.com. And then I'm going to create an autoresponder. And so all of these idiots emailing me, I'm going to literally just email them back from goatfuckyourself.com. And I cannot tell you how much pleasure that has brought me. I don't know what that says about me,

Starting point is 01:23:42 but it truly was one of the best purchases I've ever made in my life. Just so I'm clear, everyone who emails you gets an auto-response? No, no, no, no, no, no. It was selective. There were certain emails that I then set up to be auto-responded to, like consistent emails that I would get, they would be put into the file that would be auto-responded directly from GoFuckYourself.com. And then other people I would just use more surgically when appropriate and sometimes inappropriate.

Starting point is 01:24:07 But the problem, I was having fun with it and I still, you know, I get a lot of pleasure from it. But the problem was that it turns out that everybody on earth in nearly every country from what I can tell, when they fill out a form and they don't want to give their email address, the email address they give is gofuckyourself.com. And so gofuckyourself.com literally gets over 100,000 emails a day.

Starting point is 01:24:31 What? Yes. So it is completely unusable as like, you know, a vanity email address, but it is still fun as a responder. That's funny. You know what that makes me think of? I don't know why this just popped into my head. I think it's kind of funny.

Starting point is 01:24:47 Maybe I've seen the Big Lebowski too many times, but I went to this wine bar. Hotel Barone, I think it was, in San Francisco at some point. And this was pretty early. This was a long time ago with a lot of the digital signatures at a kiosk of some type when you check out. And I'd had quite a bit to drink and it came time to sign. And I asked the guy who was standing there, it's like, how many people just draw dicks when they sign? And he was like, about 80% of the guys. Come on.

Starting point is 01:25:18 I don't know why that's never occurred to me, but that's literally going to be the way I sign from now on. But yes, it's in exactly the same vein, pun intended. Brutal. This brings up, if I may segue, from fuckyourself.com. This leads very cleanly to anger management. So talk to me about anger management. Well, I attribute my, let's say, evolution of my anger management to you. I guess it's part of the reason I bought fuckyourself.com. It's part of the reason that I have the reputation I do, which is quite, I don't want to say

Starting point is 01:25:55 belligerent, but I don't suffer fools gladly. And I'm not afraid to speak my mind at all times. I am the self-designated counterweight to political correctness. And so I just like to keep it real. But a part of that is anger. I have a deep emotional anger. It's a fire that burns in me. And it's not always there, but when I get triggered, which is fairly often, it shows its ugly head. And so I would say that in my earlier life, it actually served me well. I would have even called it a superpower, but as I've gotten older and as I've evolved in business and as I've evolved in my marriage and

Starting point is 01:26:38 as I've evolved in relationships, it's not necessarily my friend. And so I've had to find ways to deal with that but it was listening to a podcast that you did you know many years ago talking about yourself dealing with anger issues and anger management you know it sort of was the first time i even went oh maybe i've got a issue maybe this isn't normal and so you know it was that recognition that sort of led me to seek out ways to start dealing with it. And it's an ongoing process. But I think it's a good highlight of things that previously served me that no longer do. It even became a part of my identity,

Starting point is 01:27:18 both self-inflicted as well as others. And when it's your default, you also find ways to justify it or paint it sometimes in the best light possible. Totally. It's like buying that domain. Totally. And all of a sudden you're like, this is my superpower. Let me create a narrative around that. It may be true in part, but then you create blind spots for yourself. Absolutely. But it's precisely what you said. You create a narrative around it that suits you to justify it, which further ingrains it into who you are or who you believe you are. And at some point it stops serving you. And it doesn't have to be anger. It can be many things, many emotions, or maybe just self-identifying characteristics. And it's very difficult to then change your software and say like, oh,

Starting point is 01:28:06 I don't need that anymore. And I'm still working on how to do it, but I've made a lot of progress. You need an outlet for it. So I started boxing. You need to reflect on it constantly to understand what are the triggers and understand, okay, when I get one of these triggers, I need to just walk away, stay silent, whatever it might be, but trying to find ways to not engage with it. And then always reminding yourself that this isn't who I am anymore, or this isn't something I need anymore. This isn't a tool that I need anymore. It's really the way that I look at it. I wanted to attribute that to you because you've done God's work in a lot of your podcasts and talking about

Starting point is 01:28:46 this issue and how you've dealt with it. And that has sent me down a lot of rabbit holes. You know, I'm very good at picking up on these threads and then diving down the rabbit hole and exploring. Well, I appreciate you saying that, man. And I want to also show the cover and title of a book that you brought. So I want to also thank you for this beauty. So this is How to Keep Your Cool, An Ancient Guide to Anger Management. And this is by one of my favorites, of course, Seneca the Younger, a very controversial figure for a lot of good reasons. And this is, I want to say on anger, Deida. And I've tried to digest the original. Well, not the original, I should say the translated original. This has both. This has both. And it's very well done. And when you gave this to me, I said, you know what? I could really use this because I want to revisit it. And I listened to it on audiobook last summer, actually,

Starting point is 01:29:45 and found it incredibly helpful. It's in some ways similar to an audiobook I listened to, which was, I think it's The Easy Way to Quit Caffeine, which is based on a method used for helping people to quit smoking. I think it's called The Easy Way for Quitting Smoking. And it's a little hokey Dale Carnegie ish. But the fact of the matter is I stopped with a few other elements and did 30 days with zero caffeine for the first time since I was probably so unimaginable for me. Oh, I know, I know. But it was unimaginable for me as well. Yeah.

Starting point is 01:30:17 But it effectively takes you through all of the reasons and justifications that you use for consuming caffeine and just dismantles them one by one. And I feel like this, how to keep your cool does something very similar. It makes me feel foolish. It makes me, when I lose my temper, it makes me say, you idiot, what are you doing? You can't even control your temper. What are you doing? So I just keep it on my desk. Really, you know, I reference it, but more than anything, I keep it on my desk. And it's a reminder that when some troll

Starting point is 01:30:51 on the internet pisses me off or somebody I'm on the phone with, you know, pisses me off. Someone gets outraged. Yeah. Because I got an auto response from gofuckyourself.com. How dare you? How dare they?

Starting point is 01:31:03 It reminds me. It's there. It's in my purview they? It reminds me. It's there. It's in my purview. And it reminds me, like, keep it cool. You have this on your desk as a reminder. I like that. Yep. Maybe that's how I'll use it.

Starting point is 01:31:12 Hard to miss. It's got like, it's like kind of a giant stop sign. And it's orange. Yeah. Giant stop sign. Totally. All right. So you mentioned, I want to know if you have any suggestions.

Starting point is 01:31:22 You mentioned you might be the world's number one email power user. A lot of people feel beholden to email. Any recommendations for folks? Or are you just like, hey man, I need to go to the email methadone clinic too. I don't have any recommendations. Yeah, no, no. I'm 100% the wrong person. So I have completely capitulated. And really, I just muscle through it every single day. I basically accepted that I have about a two and a half hour window every single day where it's just clean the inbox. So first two and a half hours of my day, almost every day are highly caffeinated, muscling through my inbox. And then my real day starts. Do you just go through G Suite or Gmail or do you use other tools? I use Apple Mail,

Starting point is 01:32:05 but our domain is on Google, but I don't use any filters. I occasionally, let's say every couple months I'll go in and I'll do the unsubscribe thing. But I honestly find that the more you unsubscribe, the more you get subscribed to other things. I think that that's the hook. But I am, for the first time in my life, I'm optimistic. I think that it seems like low-hanging fruit. And if there's an AI company super specialized in email filtering, please reach out to me. I would very much welcome your assistance. But I think that AI is going to be a really powerful tool. I think that what I do is replicable by AI. I tried it with an assistant.

Starting point is 01:32:44 Twice I've had an assistant who would like at least eliminate the low-hanging fruit. But teaching them the way I think about it, helping them understand, like, don't delete that. That is actually a really good domain name for XYZ reason. And it's only this crazy library of esoteric knowledge that I've accumulated that allows me to see that diamond in the rough. I mean, if you're getting through 1,500 or 2,000 email in two and a half hours, I think most people are going to be astonished at the speed.

Starting point is 01:33:13 I'm really good. So you must archive, I mean, a very high percentage of this. Yep, yep, a lot. If there was like a single place where I would be like, you and I differ more, I think this would be the one. It's like pure chaos. It's pure chaos. Anybody that works for me is like,

Starting point is 01:33:30 what do you mean you just operate from your inbox? Your inbox is just a tool. No, no, no. This is my dashboard. This is like everything is in my inbox. Everything. So yeah, so I don't have any tips or tricks. I really just, I welcome the use of ai to

Starting point is 01:33:47 i think finally be able to replicate what it is i do because it is repetitive so i think i can use ai to do that so i've related question which i've been sitting on i took a note so I wouldn't forget, that is related to AI. So more and more people are using ChatGPT or BARD for various purposes, putting together itineraries. And they're using them in place of, say, Google. The results are very different. And one of the narratives out there, which I think probably has some degree of substance to it, is that it appears that Google got kind of caught with its pants down a little bit with ChatGPT, even though I have a very high degree of confidence that they'll make very, very fast progress.

Starting point is 01:34:36 But nonetheless, it was because there was a question of how to use this technology. It's also a much larger company and just has machinations and processes that a tiny startup does not. However, what I was going to say is Google has the greatest moneymaker in the history of the internet. So how do you capitalize on AI

Starting point is 01:35:02 without killing the golden goose is an important question. I would imagine as a lay person that these tools are going to affect the domain world in some capacity. How do you think about that? When social media came on the scene, everybody pushed back and said, well, my domain is less important now. I connect with people on social media. Okay, you're going to regret that. And apps came on the scene and I was like, your domain isn't that important for me. People don't even go to the web anymore. They just use

Starting point is 01:35:31 apps. And then everybody has 2000 apps on their phone. And it's like, I'm not sure that's much better. Right. And now there's lots of security issues with apps. And now Google is basically trying to kill apps. And so every iteration of this, of the way humans interact with the internet, offers up the fresh new death of domain names, okay? But basically domain names are the foundational layer. They're the bedrock layer of the digital world. Everything else is built on top of that. So domain names are some super geeky technologist,

Starting point is 01:36:02 hard tech guy is going to tell me I'm, you know, for the most part, for the consumer internet, domain names are layer one. Incentive, you're out of response. Yeah. I know there's all these protocols that are underneath that are really the layer one of the internet. I understand that. But for the consumer internet, the part that matters to e-commerce and the consumer, domain

Starting point is 01:36:21 names are layer one. They're the bedrock foundation of doing commerce on the internet. If we were to stop launching new companies today or putting out new ideas on the internet because, oh, you can just use ChatGPT or BARD for that. First off, I would love to see the data, but I bet you like same as 80% of the people sign the digital signature thing with a dick.

Starting point is 01:36:45 99% of the people using ChatGPT are using it for some stupid thing like, what's the best way to peel a banana? It's like, these things aren't creating new ideas. They are really good at finding solutions from existing ideas and putting those things together in creative ways and lots of different useful stuff. But if we were to just like get lazy as human species and say, oh, AI's here, we're done. We don't need to create new companies. We don't need to put out new Wikipedias or new information or new art. We literally just stagnate because these things aren't creating that next frontier. They're literally only remixing a stagnant lexicon of art. I guess I'm just wondering how those tools,

Starting point is 01:37:31 for instance, and the reason this is top of mind for me is I ran into someone in their 20s who basically uses BARD in place of Google now, primarily because the point she made was, I don't want to click through all these different links and then click back and have to compare these various things. It'll basically summarize, put things into tables, et cetera, for me in a whole bunch of different instances. So I thought to myself, well, that's fascinating. I wonder how that will affect the SEO game and in part affect- So I think it'll tremendously affect the SEO game. And I think it will tremendously affect the formula for how to value a domain, but I don't think that it's going to tremendously impact the fact that we continue

Starting point is 01:38:11 to need them. In fact, I think there's an argument to be made that they become even more important. Your domain name needs to be semantically meaningful. It needs to be easy to spell. You can't use these cute spellings where you're missing a vowel or you're on a dot L-Y or, you know, because people are going to say, take me to Amazon or buy this thing. If you're using an agent, it's like, you know, order me whatever it is, but you need to tell it where to order that thing. And so it becomes even more important to have a really semantically meaningful domain name. That's my belief. As for Google, there's no way it doesn't cut into that ad business, right? There's no way. Ultimately, you're going to see some

Starting point is 01:38:52 cannibalization of the search business. I think that's unavoidable. Yeah. It seems to me that unique products will be in a good position. If you are a marketplace selling commoditized products, it's going to be very challenging because I could use an agent and just say, hey, buy this thing at the best price that will get delivered to me in the next two days. Use my Amex on file. Boom, done. But again, that addresses the SEO and the competition game, but wherever it's buying that thing from, they still need a domain name. Oh, yeah totally totally agreed and i think another potential winner just like you said i mean the the demise you know the end is nigh for dot coms i've heard that since i moved to silicon valley in 2000 same thing for email right email is dead and i'm like email is not dead if anything is more

Starting point is 01:39:39 valuable than ever is more valuable than ever and i think that is going to continue to be the case as the web becomes a mess of AI enhanced misinformation, disinformation, and just content spamming. I think that- Domain names are, in my opinion, there's a lot of unknowns with AI. I'm not smart enough to think all of that through. There may be a threat on the horizon that I don't see for sure. And I accept that. But in my opinion, there is more reason to believe that domain names are about to pop off in a major way because of a couple of things. One is identity and how important it's going to be to be able to verify real identity. And I think that domain names, and I think that like Jack Dorsey is on this, Jack Dorsey understands this. I mean, he's building around this. Domain names are central to everything that he's doing. So your domain name is ultimately like, shouldn't it make sense

Starting point is 01:40:32 that in order to get your Twitter handle, your X handle, you should have the corresponding domain name? If you're, I don't know, NBC, you should have x.com slash NBC. This would be sort of like a very elegant KYC kind of thing. 100%. So it's literally KYC is the right way to describe it. Know your customer stuff for people who, yeah. Exactly. So across the board, from every aspect that you can think of,

Starting point is 01:40:55 from financial to social media to e-commerce, people interacting with the internet should be identified by a domain name because it is a really powerful way to identify somebody. It ties the physical to the digital world. It's that bridge. What do you think the extension will be or what form do you think that'll take? I mean, a lot of people have.eth, a lot of people have, then you of course have.coms, but those can be pricey, right? Do you have any guess for what format that will take? I'm not going to tell you a timeline, but I think that it's in some future, most people in the first world that are engaging with the internet on a

Starting point is 01:41:30 regular basis are going to have at least two, and in some cases, three domains. They're going to have their real identity, domain name, and that's going to be less important. The more public facing you are, the more pressure there will be to have the.com. But outside of that, any extension will do. And then there's going to be your pseudonymous identity, in which case you really don't care what the extension is. And then there's going to be your sort of commercial identity, whether that's the business you own, the blog you run, but you're going to have at least two.

Starting point is 01:41:58 And if you have, let's say you've planted a flag on the internet in one form or another through a blog, a business, whatever it might be, that's your third domain name. I think most people are going to have two or three domain names. Already today, you can use a.com domain name and you can use it as a crypto wallet. You can use the DNS records without going too deep into the weeds. You can use the DNS records to basically insert your crypto address, your Bitcoin address, or your Ethereum address into the DNS records of your domain name. And then people can send, you know, I've got drew.com. I can use that as my Bitcoin wallet.

Starting point is 01:42:38 And I think that first feature of why I believe there's this huge growth curve coming for domain names. First is identity, KYC. Second is finance and wallets, specifically wallets. Because again, it's the same problem. Yes, you can use some of these Web3 domains, these.eth. And I was one of the first investors into unstoppable domains. I was literally probably in the first 50 people ever in 2015 to register 1,000.eth domains

Starting point is 01:43:04 before anybody even knew what these things were. I was a huge early adopter of Handshake. And there's going to be a lot of people that get upset with me, so I'm going to try not to poo-poo too much. But I do spend a tremendous amount of time thinking about these things, and I'm very deep in it, obviously. And so I have failed to identify a durable use case for Web3 domain names. I think they're cute. I think they have some utility. Certainly, in its simplest form, they make good wallets. I don't see a durable utility beyond that. It's definitely better to have Tim.eth or Tim.whatever, Web3 domain name, and have that instead of your Ethereum address, which would be some

Starting point is 01:43:47 very long hexadecimal string. Impossible for most humans to remember. Also very possible to fuck up. Exactly. That's not the thing you want to mess up, right? It's one thing to go to the wrong website. It's an entirely other thing to be sending money to the wrong wallet. But that actually makes the point. That's one of the big Achilles heels of Web3 domains is that there's no standard. I mentioned before that ICANN governs the legacy DNS, the root zone. If you have an unstoppable domain,

Starting point is 01:44:16 you've got timferris.x. They have the.x, they've got.wallet, they've got.whatever. So let's say you've got timferris. or tim.wallet and you tell me, hey, send me one ETH. I can send you one ETH to tim.wallet, they've got.whatever. So let's say you've got Tim Ferriss. or Tim.wallet, and you tell me, hey, send me one ETH. I can send you one ETH to Tim.wallet because today there's only one .wallet. But there's absolutely nothing stopping me from starting a new business tomorrow that also has.wallet, or from the Ethereum name service from launching a.wallet, or there is somebody on Handshake that already has.wallet. And there's going to be

Starting point is 01:44:46 every single blockchain. You're going to see that already this cycle, but over the next five years, every blockchain that exists is going to have their own domain name service because it's a very easy money grab. So you're saying there could be bad actors doing bad things with that amount of confusion? Totally. But even if they're not bad actors, there's just going to be a tremendous amount of confusion. Confusion, confusion. Because you say, hey, send me an ETH to Tim.wallet. But depending on which wallet I'm using, which wallet software I'm using, I don't know if that's going to the Ethereum blockchain. Is that going to the Handshake blockchain? Is that going to the Unstoppable? Which blockchain is that on? And so I could send it to Tim.wallet and it could go to a different Tim.wallet.

Starting point is 01:45:26 Okay. And I have nothing I can do about that unless I've got some degree of tech savvy and I can pull down a menu and select which network I want to send this over. And that's asking a lot of people. Way, way too much. It's never going to happen. And so for that reason, it's never going to resolve. The second thing is that with decentralization, I think decentralized money is great.

Starting point is 01:45:44 I think decentralized money is great. I think decentralized information is dangerous. And it comes down to one very simple thing that I find most people can understand. If you go to the average person and you say, look, there's this one internet over here and it's centralized to a certain degree and people can shut you down and da-da-da-da-da, but it's kind of good enough.

Starting point is 01:46:04 It's the internet you know and love. But we got this fancy new internet over here where it's totally decentralized. And believe me, I'm a libertarian. I'm kind of a decentralization maximalist. But I've drawn a line in the sand here for the following reason. And I'll just say, so the peanut gallery doesn't go berserk. You are also, we don't have time to get into this right now, but bitcoin advocate yes right so let's just just so people know you're in the game yes okay yes so please continue in the game for a long time and have a pretty deep understanding so

Starting point is 01:46:34 if presented with two choices of this here's the internet you know and love here's this totally decentralized new internet that has all these fancy bells and whistles that you should love, except that there's this one flaw. And that flaw is somebody can put child porn and there's nobody that can ever take it down. And on that singular point is when I made up my mind that that will never happen. The Department of Defense, which owns the Department of Commerce, which controls the internet, a lot of people don't know that, is never, ever, ever, ever going to allow any browser to resolve these things. Okay. So you've got some fringe browsers that do resolve them, but I think it's something like 98% of all internet traffic passes through four browsers,

Starting point is 01:47:22 right? It's like Firefox, Safari, Chrome and Explorer, which, you know, is probably a very small market share these days. But that's like basically all the traffic. And I can promise you, I would put virtually everything I have on the fact that those browsers are never going to resolve a Web3 domain name ever, primarily for those reasons and other surrounding reasons like that, the inability to ever censor content, as well as the fact that they then lose control to sniff every packet of data that passes through the internet. And so that's never going to happen. It's not going to happen. There may be some parallel, like we've got the dark web now, but this is never going to be a mainstream thing ever. But I do think they

Starting point is 01:48:05 make great wallet addresses to some extent today. I think that it could get messy, so you have to be careful. But it's funny, the Ethereum name service guys actually are the ones that figured out how to do this. So they kind of shot themselves in the foot, but you can now take a.com domain name or a.xyz domain name or a.net domain name, and you can use the DNS, the legacy DNS settings, and you can literally make your domain name a wallet. And so that to me is, that's obvious where we're going to go. All right. So we have five minutes left. So I want to before, just in case I get excited and lose track, where can people find MediaOptions? MediaOptions.com. If you want to learn more about domain names, we have a-

Starting point is 01:48:50 It's not mo.co? No, no, no. I actually, recently, I just sold mo.co for exactly the same reason I explained. I bought it when.co kind of launched into the public sphere. It was always the extension for Columbia, but then it got sort of repurposed like.ai did. No, I was kidding. All right. So just before we side alley, mediaoptions.com. Mediaoptions.com. And we've got domainsherpa.com, which is our podcast that's about domain names. I don't suggest it unless you want to learn about domain names and hear us.

Starting point is 01:49:20 And are you active on Twitter? I'm very active on Twitter. Twitter is the only social media I'm active on. Okay. Andrew Rosner, at Andrew Rosner. We'll link to all these things in the show notes. Last question is, pursuit of happiness.

Starting point is 01:49:31 Small one. So how do you think about pursuit of happiness? Because I will say, having spent time with you, you strike me as overall pretty happy guy. You got a little meth-y edge to you, a little twitchy, a little bouncy,

Starting point is 01:49:42 but you smile a lot of the time. Yep. I don't know if you're crying on the inside, but you seem like generally a pretty happy-go-lucky guy. You got a little meth-y edge to you, a little twitchy, a little bouncy, but you smile a lot of the time. I don't know if you're crying on the inside, but you seem like generally a pretty happy-go-lucky guy. I'm a pretty content person. Content. Okay. I have moments of happiness, but I'm pretty content. Okay. So tell me more about this and what you... So I guess the way that I think about it is that I generally want to be content. I don't necessarily pursue happiness. I pursue contentment. Is that wanting what you have or being grateful? What does that mean? Yes. I think that's another way of saying it. But for me personally, it's a bit more that Terrence McKenna had this theory of novelty, that ultimately that's what evolution is all about.

Starting point is 01:50:23 It's just about the pursuit of novelty. And that resonated with me. And I basically surmised that I think the purpose for each of our individual lives is truly, if you zoom out and you look at it from a species focus, as opposed to an individual focus, the purpose for each individual life is actually just novelty. It's about unique characteristics that make you, you,

Starting point is 01:50:44 and how you engage with the world around you and what that leads to. And this novelty is actually the objective or should be the objective again, in my opinion. Meaning there's like a variety of different characteristics, survival of the fittest. Is that how the novelty? Not necessarily. I think survival of the fittest is a mechanic the novelty not necessarily i think survival of the fittest is a mechanic in the game but it's not necessarily the end all be all of the game i think it's really just about the pursuit of novelty that you need to do things that nobody's done before you need to react to things in a way that is not typical if you do things like everybody else has done

Starting point is 01:51:21 things or like everybody else does things then you can't expect a different outcome than what everybody else has had. And I certainly am not looking for the outcome that everybody else has. You got one shot at this thing, I wanna do something else. I wanna stand out. I wanna pursue greatness or whatever that means.

Starting point is 01:51:36 But I certainly, above all else, I don't want to be like other people. I don't wanna be like anybody else, like any other individual or like any other group of individuals. I don't like labels. I just want to pursue novelty. And what I found that to mean, once you go another layer, is that really what most of life is, is actually friction and pain and suffering. And we have developed our society to run away from that. You have a right to happiness. You should be in the pursuit of happiness. And I think that makes us soft. I

Starting point is 01:52:16 think that makes us avoid risk. I think that makes us avoid pain. It makes us avoid hard work. And everything that I've seen, everything that I enjoy comes at the expense of pain, suffering, hard work, whether that's my marriage, it's a lot of work, it's a lot of pain and compromise. But through that, you achieve love and you achieve this amazing relationship that's irreplaceable. Through those days of suffering and doing whatever it takes to make $250 a day, I was able to build a business that makes a lot of money and fits my lifestyle. I've optimized it for exactly the way I want to live. I don't want to scale it. I want to have 60 employees. I want to have four or five. I want to just keep employees. I want to have four, five. And I

Starting point is 01:53:05 want to just keep doing what I'm doing. Just hone my skill and hone my skill and just, I love what I do. But all of that takes suffering and pain. You know, I think the best way to highlight it is like art. Show me one meaningful piece of art, cultural art that came as a result of like rainbows and butterflies and happiness. Great art comes from pain, suffering, heartache, mental illness, just terrible circumstances. It's really great art comes from the darkness, not from the light, but you need both. And if you ignore the darkness, you will never get the light or you'll always be chasing the light. The light will always be in the distance, but you have to lean into the pain. You have to, off camera,

Starting point is 01:53:50 we were talking about something else and you were saying, you know, I had to sit with it. And that's precisely it. You have to sit with the pain. Don't block it out. Don't ignore it. Don't push it away. Run into it.

Starting point is 01:54:02 Run into the pain. Run into the hard stuff. Run into the stuff that nobody else wants to do, because that's how you achieve novelty. And through novelty, you achieve everything. Anybody, it doesn't matter what your definition of success is, I can assure you that that person is successful by whatever definition you're holding them up to be through novelty. They did something that other people were afraid to do, that other people didn't think of. Whatever it is, it was achieved through novelty. And as far as I can tell, all greatness is achieved through novelty. It's doing things that other people don't want to do,

Starting point is 01:54:36 doing things that other people are afraid to do, doing things that other people wouldn't even think about doing. And normally, the delta between those things is pain, suffering, heartache. It's, it's, you know, the darkness. Which could take a lot of forms, right? Like could take the form of being ridiculed. Absolutely. Right. As an example. Absolutely. Absolutely. And that's just tip of the iceberg. That's like, you know, the soft stuff. That's the Nerf baseball. Exactly. Exactly. Once you get through the Nerf bat, there's another guy standing there with a real Louisville. Yeah.

Starting point is 01:55:08 So for yourself then, because you and I think are cut from similar cloths in a number of respects, one of which. Not just our bald head. Not just the bald head and striking good looks. Not just our resemblances to Jason Statham. But also I think you wrestled. I know your wrestling coach and your experience wrestling had a huge formative impact on you. Huge.

Starting point is 01:55:34 And I'm not sure if people with high pain tolerance is gravitate to wrestling or if it cultivates it or both. Chicken and the egg problem. Yeah, chicken and the egg problem. And there are other ways, of course, that people develop high pain tolerances. I think you could have childhood trauma and learn to dissociate. I mean, actually a lot of people who have that experience in childhood end up being, for instance,

Starting point is 01:55:56 very high level military operators, a huge correlation. Don't think that's a coincidence. And my question is related to my own experience. I look at... Great entrepreneurs, by the way, usually have daddy problems. It's another thing to look at when you're making investments. It's like, how's your relationship with your dad? Oh, it's great.

Starting point is 01:56:17 Terrible. Okay, meeting's over. So that'll be round two with Dr. Rosner, unpacking daddy problems for entrepreneurial success. So the experience that I've had, and I think I've contended with to a large extent, but because I have high pain tolerance and it has been a competitive advantage, I've sometimes ended up running towards painful things that are not worth doing, which seems like it can be a necessary cost if you are pursuing worthwhile novelty. But just the fact that something is painful does not justify its pursuit, right? Absolutely not. So I'm wondering for yourself how you navigate that. Because even now, I sometimes hear the siren song. It's tempting because I've been rewarded

Starting point is 01:57:02 for that in the past. But as I get older, I'm like, all right, time is fleeting. I need to be more surgical about how I approach these things, especially if I'm trying to moderate my tendency towards anger, right? Which I think those two often go hand in hand. Absolutely. Right. So how do you think about that? Simple, very important to have North star, right? So what are you optimizing for? What do you want? For me, thanks to Charlie Tuna, I was lucky that I learned very early on in my career, I had, let's say, a role model, not for everything, but for certain things about how I wanted to live my life.

Starting point is 01:57:36 I thought, wow, if you were to ask me when I was a junior in college, like, oh, what do you want to be when you grow up? I want to be like a billionaire tech entrepreneur with thousands of employees in this huge company that everybody knows. And then it was like, Charlie Tuna taught me like, whoa, that's the opposite of what you want. No, no, no, no. You want to like, definitely you want to achieve financial freedom, but that's just like step one. You know, you want real freedom. You want free will. So I optimize for that. And so I decide, is this worth pursuing? Is this going to help me achieve more or less freedom in my life? I was about to build a business.

Starting point is 01:58:11 We were going to start a new company called Pegasus about, I don't know, a year ago now, six months, a year ago. I don't know. And we spent six months planning this thing out, got a CTO. We were ready to rock. And it was in the domain business. It wasn't like I was venturing into something totally new. It's a business that I've never been so sure

Starting point is 01:58:31 I would have been successful in this business. I know it would have been successful. But we got to the one yard line. We were about to do it. And I asked myself, I was laying in bed and I'm thinking to myself, literally tomorrow, I'm going to have this team meeting and we're going to basically green light this and we're going to start putting this in action. And that means I'm going to hire

Starting point is 01:58:50 a bunch of people. And that means I'm going to be flying all over to have meetings. And I was like, I don't want any of that. I was like, I don't even know. There was a deep part of me that I don't know if imposter syndrome is the right word. I've achieved a pretty high degree of, let's say, financial freedom. But most of your audience would probably say my business is like garbage, like, oh. And the reason being is I can't scale it. I can't sell it.

Starting point is 01:59:20 I understand what you're saying. There will be a subset. Traditional metrics of, let's say, what makes a good business. There will be a subset. Totally. Traditional metrics of, let's say, what makes a good business. My business doesn't meet that description, but my business is amazing for me. And I don't want it to be for somebody else. I want it to be for me. And so I run it the way I want to run it. It brings me back to a tenet of Charlie Tuna. If you pay for the microphone, you get to say what you want to say. That resonates for me. And that comes from, I think it was Ronald Reagan who said it in a presidential debate. He

Starting point is 01:59:53 said, or no, I think it was George Bush senior. And he said, excuse me, but I paid for this microphone. Somebody tried to cut him off. Anyways, I optimize for freedom. I optimize for freedom of deciding what to do with my time outside of email. I optimize for freedom. I optimize for freedom of deciding what to do with my time outside of email. I optimize for being able to live where I want to live. I optimize for being able to move if I want to move. I optimize for spending time with my children, especially while they're young. I optimize for I eat dinner with my family every single night at 6.30. Every single night, 6.30 with almost zero exceptions, 6.30, with almost zero exceptions. 6.30, I'm sitting at the table having dinner

Starting point is 02:00:27 with my kids and my wife. I optimized to be able to, I'm going to leave in two weeks and I'm going to Thailand for two months. And then we're going to bounce around. We're going to go to Laos. We're going to go to Vietnam. And I'm going to go explore Thailand for two months. And there was this thing inside of me

Starting point is 02:00:42 that I hadn't built a business that I could sell. And there was this box that I me that I hadn't built a business that I could sell. And there was this box that I felt like I hadn't ticked. So that was the driving force for I'm going to build Pegasus. Pegasus is going to be a, basically we had a clear path that we could in five to seven years build this into a $5 billion company. And I think we could do it.

Starting point is 02:01:02 But I got to that one yard line and I ran down the checklist of the things that I want in my life. And 99% of the things that I was going to get from Pegasus was the opposite of what I want in my life. And so it was like, boom, I literally went the next day. I told everybody, I said, I'm super sorry, but literally just cut the head off the Pegasus, right? Like, you know, it's dead. This is not happening. Yeah. So that answered my question, which was like, why didn't it get spotted sooner? Yeah. I had this driving thing. I had this thing, this itch that I felt like I needed to scratch,

Starting point is 02:01:34 but I think it's important. And this is directly to your point. Like, you know, everybody's got those itches that they want to scratch, but ask yourself why, like, where did that idea come from? That idea came because that was what everybody else wanted to do. That was the common narrative. If you go on x.com right now, you're going to see there's a bazillion people that are startup porn and hustle porn. And it's like, I haven't slept in four days and they're proud of it. And it's like, no, I want seven and a half or eight hours of sleep every night. I'm optimizing for that. And granted, in the early days of starting the business, there's a lot of nights that I'm not getting that.

Starting point is 02:02:16 And there's a lot of suffering and a lot of pain, but I was able to suffer through the pain and the hardship and the extraordinary hours and the blah, blah, blah, blah. Because I had this North Star, I knew that there was a light at the end of the tunnel. And that light wasn't some ambiguous goal that somebody else gave me. It was actually what I wanted. It was actually what Charlie Tuna had taught me about how I wanted to live my life. I wanted to be free. I wanted to be able to not answer to anybody for anything except my wife and literally just live my life as I choose. If you inspired me right now with some idea that achieved some of these things that I want in my life, close the business

Starting point is 02:02:52 tomorrow or let the guys run it. And as I'm out and go live in the Amazon, like I, I want that optionality, even if I'm never going to take it, I want that optionality at all times. And I don't ever want to feel like I have to make a decision because of somebody else's agenda. Agenda priorities. Exactly. So I hyper-optimize for that. Thank God for Charlie Tuna, huh?

Starting point is 02:03:15 Thank God for Charlie Tuna. Really. You know, actually, if I were to say the three most important influences in my life, it would be wrestling. You know, from an early age, I started at five. This is hilarious because literally our coach, salute, Wayne Griffin, one of the top wrestling coaches in America. It's not, I say, in Ohio or Pennsylvania. He used to write in marker across our forehead or in a meet, he'd write it across our headgear. Pain is temporary, pride is forever. I guess that stuck with me. Started at an early age.

Starting point is 02:03:46 And then I was very lucky. My parents really modeled for me. I want to say this because I think it's also one of the elements that defines success for me is it's also super pertinent to what we're saying. It's like my parents have been married 40 years, 50 years. And I think that a long, enduring, mostly loving marriage is one of the most underrated elements of success in the world. Maybe the most underrated. I am self-destructive. If it wasn't for my wife, it's a binary outcome. I'm either like dead or I don't know, eccentric billionaire doing things that don't represent any of the things I've just described to you as what I actually want in my life. Howard Hughes putting his urine in milk bottles.

Starting point is 02:04:31 A hundred percent. A hundred percent. I'm going to save you that story. Oh wow. Round two. Daddy issues and urine. It certainly wasn't easy, but they modeled for me what were the minimum requirements to have an enduring relationship.

Starting point is 02:04:49 And so that was really important. And then Charlie Tuna. Charlie Tuna really just took it away. What a fucking crazy story, man. Your life is amazing. It's so wild. Every day, I really believe I have the best job in the world because every day I'm engaging with just super interesting people. You and I have different paths to the same thing.

Starting point is 02:05:08 Yes, 100%. 100%. That's why you resonated with me from the get-go, man. What an amazing path to just engage with these high performers. You get to hear a lot more of their stories. I don't get to ask a lot of questions. although you know you get to have off the record conversations about money and i remember someone said to me they were like if you really want to know somebody you got to talk to them about their finances and sex and they're like you will know everything about that person yeah and so it's a good idea for a new podcast i'm having public conversations so you get you get a very different side yeah you get the behind the scenes yeah which is also yeah super interesting not all the time but yes yeah i mean i again i i'm an extremely discreet person my

Starting point is 02:05:59 privacy is is kind of like a it has to be be, it has to be a religion for you guys. So we're going to wind to a close, get you to dinner with your family, get me to dinner with my team. Is there anything you'd like to say before we close up shop for the day? Thank you. It was really an honor to sit down with you. I really cherish it. I've taken a tremendous amount of wisdom from you and your

Starting point is 02:06:26 guests over the years. So it's a bit surreal to be sitting on this side of the microphone, but thank you. You're welcome. Thank you for all that you do. My pleasure. Really. Yeah. Thanks, man. And I remember since our first meeting, we were talking about this Hokkaido scallops. I was like, all right, there may be a plain time when we have to have a conversation in front of some mics. Even when I was young, my sister and I learned Japanese. When I was probably 10 to between 10 and 13, a couple of days a week, we went to this woman's house and she would teach us origami and how to cook and speaking Japanese. But I but I, I, I've lost all of it. So I'd be embarrassed to try. I think I can count to eight is about the extent of my Japanese these days. Well, you know, you have that optionality. Yeah. Tomorrow you could close up shop and become

Starting point is 02:07:15 a Buddhist monk in the mountains of Japan. That might be next year. If you want it, if you want it. All right. So just to recap where people can find you, mediaoptions.com, the industry's leading educational podcast, Domain Sherpa, which people can find at domainsherpa.com and on Twitter. DS.TV will take you to the YouTube channel. DS.TV goes to the YouTube channel and at Andrew Rosner on Twitter. And we'll include also additional tenets of Charlie tuna and so on in the show notes. Yeah, they are priceless and they should be in time immemorial. So yeah,

Starting point is 02:07:51 so we will put those as always a tuned up blog slash podcast and people can find this and to everybody listening. Thanks for tuning in as always be a little kinder than necessary to others and to yourself until next time thanks so much for listening to the tim ferris show ta-ta when i said hunting bigger fish i mean it quite literally in the sense that i said before people were knocking on my door to have me sell their domain names. And now, as opposed to trying to go solicit and sell these $5,000 domains, $20,000 domains, $50,000 domains, I said, I want to go contact the owners of some of these bigger domains and pitch them on having me go sell these domains to an end user. And in order to do that, I had to have some semblance of an idea

Starting point is 02:08:47 of what I thought their domain is worth. Because whether you're contacting a buyer or a seller, the first question, what's the price? What are you going to sell it for? What are you trying to sell it for? And so- Scallops, houses, doesn't matter. Doesn't matter.

Starting point is 02:08:59 What's the price, right? And so I had to do a lot of thinking about what am I going to tell them? And I'm not going to lie. There was a lot of fake it till you make it in the early days. Okay. $1 billion. 100%. You know, it isn't bad news, Bob.

Starting point is 02:09:20 I didn't get the billion. Here's the good news. There was a certain degree of also telling these people what they wanted to hear. Because I didn't have a billion. Here's the good news. There was a certain degree of also telling these people what they wanted to hear because I didn't have a reputation at that point or not much of one. I didn't have a lot to write on. Bob, you may have heard of pizza.net. Yeah. All right. Sorry. Keep going. No, no. So the absurdity is not lost. So at that time, you know this well, you're sort of a soft master of this. In that early 2000s, mid 2000s, SEO was really the name of the game for online marketing. That was where people were really making the real money. And most people were guessing at it, but there was a few good people that really knew how to play the game. And I got very lucky. I'm not going to say his name because he's one of my favorite people in the world. He's one of the just truly an amazing, amazing, one of the

Starting point is 02:10:10 most humble and just incredibly intelligent and just one of the, by my definition, one of the most successful people I can think of. He's very private, so I won't say his name. But I was lucky enough to get him as a client. And he basically said, look, he hired me to actually go buy domains for him as opposed to what I had been doing, which was outbound selling. And the domains he wanted to buy and the prices he was willing to pay for them were shocking to me. And I couldn't understand it. And I'm a very curious person.

Starting point is 02:10:39 And so I was really like, I kind of pride myself. I don't ask too many questions of my clients. And I think that that's one of the things that they appreciate. But I, you know, when the opportunity arises, I try to get into their head and understand how they see these things, particularly as it pertains to domains and other things that are pertinent to me. So I got to understand the way he saw domain names. And I realized that even though he didn't know it at the time, it was literally the key to creating an objective valuation for any domain name. And I had to tie it back to a way that people in business could understand to create a business case for, because people just flat out

Starting point is 02:11:20 reject you because these domains are expensive and they don't plan. If I'm soliciting them, they weren't planning to spend this money to buy this domain. So it's just very easy to just say no. So I have to have a very compelling business case as to why they should spend this money to buy this domain. And this took quite some time. And I guess this is one of the reasons for my success was, again, I'm not afraid to just throw things against the wall.

Starting point is 02:11:44 And so I would start formulating these sort of algorithms are too strong of a word and make me sound more clever than I am. But these formulas of how I could think about and how I could demonstrate to somebody what this domain was worth in an objective way that was based on data that couldn't be negated. This wasn't an emotional thing. This wasn't a intangible thing. It was like, look, let's think about what is the purpose of a domain name. And the purpose of a domain name is to connect a business or an idea with its intended customer or reader. Many different use cases on the internet. Let's stick with business for now. So connecting a business,

Starting point is 02:12:32 it's products and services with a intended customer. And you can do that with an IP address, which is ultimately what a domain name is masking. It's an IP address, but humans aren't very good at remembering long strings of random numbers. That was really the point of creating a domain name. So if we think about a domain name from that first principle of domains exist because it's a human readable format for getting somebody on the internet to a destination, then what are the characteristics of the domain name that might make it more valuable than another one? And I thought about it from a business perspective. I said, okay, when I'm, if I'm going to create a startup, I'm looking at it from a perspective of what's my total addressable market? How big can this business be?

Starting point is 02:13:08 And I believe, it's my thesis, which has seemingly proven true over hundreds of millions of sales and many years now, is that you can measure the total addressable market, the objective, not necessarily subjective, but the objective addressable market of a domain name can be measured through starting with search volume. So you can go to Google or any of these SEO tools and you can say, okay, how many people a month are searching for car insurance? Just the words car insurance. And then there's an associated long tail with that. You know, car insurance in Phoenix, Arizona, new car insurance, used car insurance, best

Starting point is 02:13:43 car insurance, right? Car insurance quotes. There's a whole long tail associated with that. And each of those long tails is discounted to some extent. But primarily, we're looking at the core, exact match search volume for a particular keyword or acronym. And that's going to give us the total addressable market

Starting point is 02:13:58 in the United States, globally, whatever country. You can usually break these things down by country and see where is this market. And then you can see what is that market worth by looking at what are advertisers willing to pay for that keyword. There's a certain amount of traffic going to Google searching for that. Now, for simplicity's sake, I'm focusing on Google here because it's the one that people are going to resonate with the most. But we extrapolated, not immediately, but over the years, we've extrapolated this out to basically measuring use in culture and use in commerce, which can be measured on

Starting point is 02:14:31 social media, which can be measured on YouTube, which can be measured across a whole frame of different metrics. But for the purpose of simplicity, we're measuring how many people are searching Google for this keyword or acronym? What are advertisers willing to pay for that keyword or acronym? And that's going to give you just those two numbers alone. It's going to tell you what's the total addressable market on a monthly basis for that keyword or acronym objectively. And then you can extrapolate that out by a reasonable business multiple and say, okay, well, this total market is worth, I don't know, conservatively, let's say 36 months. In some other industries, maybe it's 60 months. In some other industries, it might be 120 months.

Starting point is 02:15:13 Could you explain that for a second? You know, I'm from Long Island. Yeah. A little slow on the uptake sometimes. Explain how the time varies. Each business or industry, if you're looking at M&A, one business is going to

Starting point is 02:15:25 buy another business. There's generally a multiple that these people will pay. In each industry, it varies. And the type of business is very same. Oh, I see what you're saying. So the multiple is dependent on which industry the search term is associated with. Yeah. How durable is this business? Right. I got it. So if it's retail versus SaaS versus whatever. Yeah. If it's some sort of the hot new shiny object trend, you're going to put a pretty low multiple on it. It might be two years, three years, right? If it's, I don't know, cabinets.com, it might be a very long multiple because it's a very durable industry. It's not going to be a lot of disruption and the multiple is going to be generally be a bit, a bit higher. Oh, I see. I wasn't thinking about this correctly. Right. So

Starting point is 02:16:09 the durability is a real factor in this particular calculation. It's not just looking at the industry and what type of acquisition prices. It's both. Right. It's a combination of those. And again, this comes back to like meeting people where they are, right? So I generally will not presume, and I'll ask them like, if you were buying a business in your industry, what's the multiple you'd be looking to pay? And that's the number that I'll use.

Starting point is 02:16:35 And most people know that off the top of their head. Like, oh, generally we pay three, you know, 3X, 5X. When I'm doing back of the napkin, I generally use three because I like to just be conservative. And I find that to be the best approach with domain names because as you said, most people don't understand how to value these things. So the more conservative you are, the more you're going to resonate. So you multiply that out. You got how many people search per month. Okay. Let's

Starting point is 02:16:59 just call it use in commerce and culture. We can measure that. What are people willing to pay for that traffic? You can measure that, multiply those two, and then extrapolate out by the number of months that is appropriate for that industry or business. That's going to tell you basically, roughly speaking, there's other variables, but that's going to tell you your total addressable market. Now we're going to look at click-through rate and conversion rate. So that's the next part of the formula is here's the total addressable market. And here's the amount of that market I feel like I can realistically capture. And this is where sort of the SEO comes in. So if you are ranking number one in Google for a particular keyword, and it varies based

Starting point is 02:17:39 on keyword, and you're the number one organic listing, meaning you're not paying Google to be number one, you're the number one organic listing, meaning you're not paying Google to be number one, you're organically ranking, you can reasonably expect somewhere in the 25%. It used to be 28, maybe it's 23, maybe it's 18, but it's 20, 28% click-through rate, just for being the organic first listing. Of that, let's just say roughly speaking,

Starting point is 02:18:05 there's 100,000 people a month searching for this keyword. 28% of those people, let's say 25 for easy numbers because I'm doing public math, which is generally a rule I have against doing, but 25% of those people are going to click. So now you've got 25,000 people that are going to come to your website. And how many of those people

Starting point is 02:18:22 are you going to reasonably convert? I like to use 2%. I think it's generally a conservative e-commerce metric, 2% to 4%, but let's say 2%. So you're going to have about 500 people per month that are converting. And then you multiply that by whatever you would have been. It's basically the opportunity cost. So what would you have been paying Google to get that? And that's going to tell you the cost of customer acquisition to be that number one position in Google. And then based on a bunch of studies from like Microsoft, we can reference those studies in your show notes if you want, but you can demonstrate what the delta is

Starting point is 02:19:05 between having a domain name that clearly, it needs to be one of two things. It needs to be a brand that people trust and or recognize, or it needs to have clear intent baked in. So the domain name needs to match the intent of the user. And if you have those two things, you're going to materially increase. I don't remember the exact number offhand, but it's a very material increase in the conversion rate and the click-through rate, both. So using that formula, we can demonstrate very clearly the delta between your cost of customer acquisition on joeysbagofdonuts.com versus donuts.com.

Starting point is 02:19:46 You're going to have the higher click-through rate, which is going to give you the bigger opportunity. And then you're going to have a higher conversion rate, which is going to obviously grow your business. And so that delta extrapolated out by whatever that reasonable business multiple is, is the objective value of the domain name. Does that make sense?

Starting point is 02:20:06 It does make sense. I think I'd probably need to see it. So ultimately, we're taking it back to that first principle, which is a domain name's value is its ability to arbitrage your cost of customer acquisition. If we can reduce your cost of customer acquisition with this domain name, there's a value. And then you just have to multiply that value out by however long you feel is appropriate for your business to tell you what is this domain name

Starting point is 02:20:36 worth to your business. And that is a non-trivial, non-objectionable business case that ultimately is what led to my success in this business was I was able to make a business case and convert people where others failed because it was a mathematical valuation methodology that nobody had ever seen before. And you could say, how can you say no? I'm showing you how I'm going to reduce your cost of customer acquisition, which is one of the most important metrics any business is going to measure. If I can do that, how many months multiple are you willing to pay me? I guess the months multiple is where it seems like you could have a disagreement.

Starting point is 02:21:14 Sure, absolutely. And that's where the disagreement lies, right? But this certainly doesn't have a 100% hit rate. Most people still have an emotional block to, I'm not going to pay some domain squatters, you know, X amount of money for this domain name. It's just an emotional wall. I mean, sometimes I can break through that. And sometimes I can't over long periods of time. I'm generally pretty good at converting people. But once it clicks for people that there is a material reduction in the cost of a customer acquisition, I don't need to close the deal on that day.

Starting point is 02:21:43 It's like the movie Inception, you know, the Leonardo DiCaprio movie. Once I've planted the seed in your mind, you're going to go home and you're going to go to bed. You're going to have board meetings. You're going to meet with your founders. You're going to meet with teams in your company. At some point, it's going to come up and you're going to wake up one morning with this moment of inception where you think it's your idea that you're going to be able to scale your business in a way that you otherwise wouldn't be able to. You're going to launch a new division. You're going to start buying paid advertising. Some initiative is going to benefit tremendously by owning this domain name. Maybe a new competitor has launched. Maybe there's somebody with your brand name in a different industry and you don't want them to have the domain, but something is going

Starting point is 02:22:29 to pop. There's going to come a moment, which is why domain names are generally a very long sales cycle, but there's going to be an inception point where you wake up one morning and you think, okay, I now I need this domain name. And then you're going to call me back or you're going to send me an email and you're going to say, hey, is that domain still available, right? And sometimes it is, sometimes it's not. Another sort of powerful phrase that we've coined is off the market forever. Once these things sell, they're generally off the market forever. The moment a company makes a decision to acquire this domain name that they were fighting tooth and nail not to buy previously, it's basically priceless to them. Because what they then say, which is so interesting to me,

Starting point is 02:23:10 because they don't realize it before buying it, they then say, but this is my brand. And you go, well, I couldn't agree more. But then why didn't you want to buy it in the first place? But the moment a company buys it, the first thing they'll tell you is, no, this is my brand. I can't sell it. We had, I won't use the specific example, but we sold a domain. It was quite a good price, right? But I was fighting tooth and nail. Nobody wanted to buy this domain. Very good domain. The price was very good. It was $250,000 for a domain that I would tell you is worth at least double, triple that. And we finally sold it. And immediately, literally 24 hours later, this, I would say the David versus the Goliath, the David shows up and says, you know what? I made a mistake. I want to buy it. And he said, I just sold it. And so this guy was really,

Starting point is 02:23:57 really successful, but he was like, he was like a ninja, right? Versus a big Goliath. He was like the Charlie Tuna versus the big factory, but he had a really successful business and he had some money and he said, look, offer them. I think it was like the example. I think it was a hundred thousand dollars more. Owner said, no. And this guy just bought it. He hadn't done a single thing with the domain name. It literally hit his account 24 hours ago. He hasn't set up an email on it. He hasn't even redirected the domain name. It's got a parking page on it. Nothing, zero. He just is now the owner. And we went from, he bought it for 250. This guy offered 350. He said, no, went to 500.

Starting point is 02:24:31 He said, no, went to 750. He said, no, went to a million dollars. He said, no, that guy tapped out. And this guy was just like, I don't think there's a price. It would basically be, he'd have to buy my whole business for me to sell this domain because this is my brand. It's a very strange phenomenon where people don't, they don't make that click before buying the domain. And the moment they own it, they realize how powerful this is for their brand. It's the most important asset in many cases, not in all cases, but in many cases, it's much more valuable and much more powerful than their trademark itself. Because he who has the.com, there's only one. If it was applecomputer.com,

Starting point is 02:25:11 they couldn't run around calling themselves Apple because somebody else would own Apple and they would be Apple because the.com is ingrained into people's brains with trillions and trillions and trillions of dollars in advertising since 1985 when the first domain name was registered. It's just an endless, every sports game has domain names pasted around the arena. Every news channel you're getting inundated with dot coms, every big brand that you know, like it's just ingrained, it's assumed. And so if you are anything except your exactbrandmatch.com, you cannot or should not refer to yourself as your, let's say, raw brand. If you're.net or.io or.ai even, I would argue, and you're not calling yourself, like

Starting point is 02:26:01 let's say you're, I'll use Dharmesh because he's a good sport. Dharmesh from HubSpot. He has agent.ai. It's a new little venture that he's launched. And you can't call yourself agent unless you've got agent.com. Why not? Because people are going to assume you're.com. If you're agent.ai, then your brand is agent.ai. And if you refer to yourself as anything else, you're going to lose, at a minimum, you're going to lose 10% of your traffic that this has been done. The best study is from Overstock. Overstock tried to do a rebrand to O.co. That's a whole super phenomenal, interesting story that comes back to the one letter.coms and whatnot. But

Starting point is 02:26:42 they tried to do a rebrand to O.co and they were obsessed with this and they'd made an enormous campaign and they did massive branding, massive advertising to promote this rebrand. And they immediately, like, I don't remember, I think it was like six months, maybe less. They immediately pivoted back to overstock.com because what they saw was that they were losing, I think it was 40%. It's like 30 to 40% of all their traffic was getting lost. Why didn't they just redirect overstock.com to o.co? Is that a dumb question?

Starting point is 02:27:16 Well, no. The point was that they're out there advertising themselves as overstock is now o. Yeah. But then people type in O.com. Oh, I see what you're saying. I see what you mean. And then it's a dead website. And so what does that say about your brand?

Starting point is 02:27:32 I'm on a 404 page or I'm on a dead, this domain doesn't resolve page. So it's very detrimental to your brand. I mean, I think Amazon highlights this best. I don't know what the increase in conversion rate was, but just by taking away one step and making the one-click purchase had a profound impact on conversion for Amazon. Say that one more time, please. When Amazon introduced the one-click purchasing, it had a profound impact.

Starting point is 02:28:00 I remember at the time, they were talking about it like these very small, if you can remove just even very small incremental elements of friction between your customer and their journey, journey to close. With every small bit of friction that you can remove, you're materially increasing your conversion rate and obviously top line and bottom line. As demonstrated by the number of Amazon boxes that arrive based on my 3am orders that I think are 100% important and critical to my life path. So ultimately, that's what a domain does. That's why Amazon bought Prime.com. Because when I use Prime.com, every time I want to watch something on Prime, I go to Prime.com. I don't go to Amazon and then click on my account and then click on Prime and then go to Prime Video. There's five steps there. Instead, I just go to prime.com. I don't go to Amazon and then click on my account and then click on prime and then go to prime video. There's five steps there. Instead, I just go to prime.com. You know, this is maybe my one opportunity to share the only, I think the only domain trivia

Starting point is 02:28:56 that I have with someone who knows domains a thousand times better than I do. And I'm sure you know this already, but do you know which.com forwards to amazon.com that... I know a lot of them. I sold most of them to them. Did you sell relentless.com? No. So relentless was actually going to be the original name for Amazon. That was Jeff Bezos' original domain name for the venture, actually, before pivoting to Amazon. Yeah. But they've got a lot. Jeff loves domain names. When he was running the company, when he was still CEO, they bought a lot of domain names and we sold them a lot of domain names

Starting point is 02:29:31 and very strategic and very smart. He understood domain names in a very profound way that most other business executives don't. And I can tell you that with quite a strong basis because I literally have done business with virtually all of them, all of the big companies, and very few understand how a domain name can solve that customer journey the way that Jeff did. And he utilized a lot of these domains. I mean, he was way ahead of the curve. He bought podcast.com, which forwards now to audible. He bought a lot author.com and prime.com and tube.com. It's a smart man. Yeah.

Starting point is 02:30:12 Very, very, very ahead of the curve. Hey guys, this is Tim again. Just one more thing before you take off and that is five bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bullet Friday. Easy to sign up, easy to cancel.

Starting point is 02:30:36 It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kind of like my diary of cool things. It often includes articles I'm reading, books I'm reading, albums perhaps, gadgets, gizmos, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests. And these strange esoteric things end up in my field and then I test them and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try it out, just go to tim.blog

Starting point is 02:31:16 slash Friday, type that into your browser, tim.blog slash Friday, drop in your email, and you'll get the very next one. Thanks for listening. This episode is brought to you by GiveWell. There are more than 1.5 million nonprofit organizations in the United States and millions more around the world. It is very hard to separate the single from the noise. What I mean by that is how do you know which few could actually make a big impact with your donation rather than frittering it away with operational expenses and ineffective initiatives? Well, GiveWell has done the hard work. GiveWell was founded to help donors answer that question precisely. They pour over independent studies and charity data to help donors direct their funds

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Starting point is 02:33:23 givewell, G-I-V-E-W-E-L-L, givewell.org to learn more or donate. This episode is brought to you by Eight Sleep. Temperature is one of the main causes of poor sleep, and heat is my personal nemesis. I've suffered for decades tossing and turning, throwing blankets off, pulling the back on, putting one leg on top, and repeating all of that ad nauseum. But now I am falling asleep in record time. Why? Because I'm using a device that was recommended to me by friends called the PodCover by 8Sleep. The PodCover fits on any mattress and allows you to adjust the temperature of your sleeping environment,

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The Tim Ferriss Show - #711: Andrew Rosener — Becoming The Hokkaido Scallop King, Leasing Blue Chip URLs, Life Tenets from Charlie Tuna, Selling 8-Figure Domains, and More

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