Andrew Rosener is the founder and CEO of Media Options, one of the world’s leading domain name brokerages, having bought and sold domains for clients such as Mark Zuckerberg and Elon Musk. He has been inducted into the Domain Name Hall of Fame and received the domain name broker of the year award in both 2014 and 2015. He is also the CEO of Ganjapreneur, and over the past several years has amassed a portfolio of premium cannabis-related domains that will likely skyrocket in value as the legalization movement continues to spread around the globe.
Andrew recently joined our podcast host Shango Los to share his knowledge and experience as a domain name broker and investor and to help shed light on an industry that is not well-known to the general public. In this episode, Andrew discusses why domain names are an asset class very similar to real estate, why the negative stereotypes about “domaining” as trademark squatting are not relevant to today’s domain name aftermarket, as well as why premium domain names are valuable to start-ups and why companies who invest in a premium domain to represent their business are more likely to succeed.
Listen to the full episode below, or scroll down for the full transcript!
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Shango Los: Hi there and welcome to the Ganjapreneur.com Podcast. I am your host, Shango Los. The Ganjapreneur.com Podcast gives us an opportunity to speak directly to entrepreneurs, cannabis growers, product developers, and cannabis medicine researchers all focused on making the most of cannabis normalization. As your host, I do my best to bring you original cannabis industry ideas that will ignite your own entrepreneurial spark and give you actionable information to improve your business strategy and improve your health and the health of cannabis patients everywhere.
Today my guest is Andrew Rosener. Andrew is founder and CEO of Media Options, a domain brokerage and investment firm. He received the domain broker of the year award in both 2014 and 2015. He has also been inducted into the domain name investors hall of fame. He founded hempbox.com, is an investor in SteepHill, vida.com, Lodo Labs, and Evoked Vaporizer and is CEO of our very own Ganjapreneur. Welcome to the show, Andrew.
Andrew Rosener: Thanks a lot. Great to be here, Shango.
Shango Los: Andrew, let’s start at the very cusp of this to get a good grasp of the market dynamic behind domain names. When speculating on domains, what is the model for actually making a profit on buying these in advance?
Andrew Rosener: It’s no different than any different asset class. That’s exactly what domains are, they’re an asset class. Although, the general public probably doesn’t recognize that. At this stage, I think we are still in the early stages of the internet and that’s becoming much more common. There’s a lot of large money, family office money, private equity money moving into the domain market, you know hedging by owning some premium domain names. The principles work the same as real estate essentially. From the investment standpoint, obviously is what I’m discussing, you’re looking to buy under market value investing in the very Warren Buffet sense of the word and then either holding or flipping. There are many ways to monetize but it’s value investing. You’re looking to find domains that you think are available to purchase for less than what they may be worth to either the wholesale market in the course of a flip or to the end user who is ultimately the company that could put good use to that domain and drive commercial value from it.
Shango Los: Choosing the right domain name seems to be the key between making no money and some money. What are the attributes you that you look for in choosing a profitable domain name.
Andrew Rosener: That’s true both from the investment standpoint as well as the end user standpoint. Having done this for as long as I have and having completed as many transactions as I have, I have seen it first hand, the companies that come to me, these startups that come to me and say, we want to buy this domain name. Whether we own it or we’re helping them to acquire domain from a third party and they say, no we’re not going to pay more than $5,000 for that premium .com. You’re like, well the domain is worth a lot more and you’re not going to get it for less. They’ll go, well I’d rather buy a .io. I say, okay fine, you’re going to pay me to acquire the domain name, I’m going to give you my advice and you can take it or not.
The ones that don’t take my advice, the ones that go out and buy that .io or .net or some other alternative extension, they don’t get the premium domain. Or they put some prefix or they put some suffix on their domain name, they don’t buy the premium domain, the right domain that they should from day one. Those businesses just have a much worse track record. I think that the mentality of the founder or the mentality of the guy making that decision is probably reflective of some of the business decisions they’re making. Obviously, there are exceptions to the rule. For the most part, I see founders that come in and buy the best domain for their business from day one, those turn out to be successful businesses.
Now, on the investment standpoint, you’re looking for very much those same domain names. You’re looking for the domain that that smart founder is going to want and more than want, ideally they’re going to need. You’re looking for domain names that represent some type of commercial service, product, whatever or something that represents a tremendous brand, a generic brand. Something like ring.com that was recently sold for a quite substantial price tag and is now the internet of things doorbell that everybody’s raving about.
I think if I had to put quantifications on it, the most common attributes that I see people looking for at the brand level is no more than six characters .com, ideally one word .com. Easy to spell, passes what we call the radio test which is if you hear an advertisement on the radio and I say visit us at xyz.com when you get home, you know how to spell it, you’re going to know exactly where to go, easy to remember, easy to spread word of mouth without having to explain it. Whereas, if it’s something like I don’t know, vanilla.com. You call your company Vanilla but instead of buying vanilla.com you buy vnla.com and you think that you’re clever and you think you’re cute but really all you’re doing is creating a branding catastrophe. Because you say, visit us you know, we’re vanilla and here’s our message and come visit us. They’re like well, you’re not at vanilla.com, you’re at vnla. Every time that you say your email address, you need to explain it to somebody, you know that can be painful.
Shango Los: Andrew, I would think that timing is really important as well because folks like you have been collecting cannabis domain names now for several years. Some people are saying all the good cannabis domains are taken but from working with you, I know that there’s a certain amount of R&D at play here and finding out what the next wave of cannabis domains are going to be cool so that you can buy those in advance. What are the moving parts? How do you look into the future to know what good cannabis domains will be coming along.
Andrew Rosener: If you want to focus specifically on cannabis domains, I’ll say timing … On multiple levels, across the board on a daily basis I tell everybody, not just in cannabis domains but domains in general, price is very low in the hierarchy of needs in completing a successful sale and timing is very high. Timing is the absolute unequivocal most important variable in any domain transaction whether you’re buying, you’re selling, timing is everything probably 80-90% of the transaction variable equation. In terms of cannabis, there are two ways to look at. In terms of timing, yes all the good domain names are gone. Everything that is worth anything today is gone. If you register something on Go Daddy today unless it’s got some unknown meaning to the rest of the world, it’s worthless and you can tell yourself otherwise but for the most part you’re registering something that is garbage, it’s worthless. You’re probably going to have to upgrade later down the road and it’s going to cost you a lot more or you’re going to fail.
Shango Los: That sure is chipper.
Andrew Rosener: Yeah, no but it’s just a fact. I’ve conducted 100 million dollars in domain transactions, I’ve seen the guys that come, I’ve seen the guys that go, I’ve seen the ones that win, I’ve seen the ones that lose. It’s exactly what I’ve talked about before. That’s the first element of timing in terms of cannabis domains is that yes, anything that is good that has intrinsic value today is already gone. But when I say gone, all that means is that you can’t get it for $8.99 on Go Daddy. Everybody or a lot of people have it in their head that if I can’t get for $8.99 as a new registration on Go Daddy, it’s gone, it’s forever lost and that’s bullshit, it’s not true at all. There is a very active and healthy after-market for domain names.
There are a number of large portfolio owners in the cannabis market that have tremendous portfolios of cannabis-related domain names. Some are of generic nature, descriptive nature like mjshops.com. Then others are more brandable, something like bluedream.com you know, one of the iconic strains in the cannabis market. There was a company I just saw, I suppose it went public. There was a press release about a company called Pineapple Express and they launched their brand on pineappleexpress.com. That put a smile on my face just because Pineapple Express is another iconic brand in the cannabis industry. It doesn’t need to be used necessarily just for representing the strain that it describes. It can be used for any type of business because it has that mind share. Mind share is another one of these variables that we should probably come back to later in the conversation.
People immediately, if you say my name is bluedream.com, my name is sourdiesel.com, people know the industry you’re operating in from the start. What you offer in that market is up to you but you’ve already captured some degree of mind share. You’ve already created an instance where people know who you are, they’re going to remember who you are, they’re going to know where to find you. Ultimately, that is what domain names are all about. If we look back, why do we have these types of domain names? Well, because we started out with these long strings of IP addresses that nobody could communicate or remember and we needed a way to facilitate something else that would be more memorable, something that would be more communicable, that would express a message, a communication.
That’s ultimately the underlying value of a domain. You’re looking for attributes that further help to achieve that value, that memorability, that ease of communication, easy to spell, easy to … The shorter the domain name, the faster it is to get onto your website, particularly in a world where mobile internet use is now exceeding desktop internet use. If you’re on your mobile phone, you don’t want to type in a 12-character domain name or a 24-character domain name that’s three words. The shorter it is, the better it is.
Shango Los: I think that’s a good example that it is much more like real estate, where even thought the domain name that you want may not be available at $8.99, you can definitely find it on the secondary just like you can buy a piece of real estate on the secondary market. We’re going to take a short break and be right back. You are listening to the Ganjapreneur.com Podcast.
Shango Los: Welcome back, you are listening to the Ganjapreneur.com Podcast. I’m your host Shango Los and our guest this week is Andrew Rosener of media options. Before the break we were talking about the attributes of what makes a good domain and how best to go about getting it. Andrew, to kind of use your own portfolio as an example to educate folks on how to put together the entirety of a portfolio, what have you collected recently and what are some of the domains in cannabis that you’ve got that you think are going to be winners long term?
Andrew Rosener: I’m happy to discuss that. One point I just want to quickly make. Before we cut out for the break, we were talking about the similarities to real estate. I want to emphasize how true that is. Just the way that real estate deals are done and like you said, the open land. If you want to buy let’s call .com is like Los Angeles or New York or Miami, the prime real estate markets. Just like you can’t find an empty lot there anymore, if you want to buy something in those markets, you’re going to buy it in the after market. The same is true here with domain names. Those transactions can be structured in many different ways.
It’s not just that, oh you’re going to get raked over the coals. If you’re dealing with an intelligent operator, there’s a lot of ways to skin a cat so to speak. You can do a lease. Leasing has become a very popular way of handling a domain transaction for a high value domain. Even that lease can be structured in many different ways. You can do a straight lease where it’s a fairly low monthly payment. The domain generally would get held in escrow by a third party escrow service. We like to use a company called escrow.com, licensed, bonded escrow service, state of California. They hold the domain name, nobody has to worry. The transactions are 100% secure on both sides, everybody is protected. The payments go to the escrow service, they confirm receipt, then they send the payment to the lessor or the seller.
Then you have a lease with an option to buy where people can say yeah, I’d love to buy bluedream.com. Obviously, you can’t get that for $8.99 at Go Daddy, it’s going to cost you some money. Maybe you can’t afford to buy it now because you’re a startup in the cannabis space as most businesses today are. This is a relatively new industry so pretty much everybody is a startup. Big or small, everybody is a startup for the most part. Conserving cash flow is pretty critical for startups. If you can’t lay out a lot of cash upfront to get your domain, don’t give up hope. It’s still better to enter into a lease.
It’s still better to enter into a lease to own where you pay a monthly fee to lease a name. You get full use of the domain, just as if you owned it but you have the option to buy that domain at some time during the course of the lease. It might be a year, it might be three years, it might be five years. Every deal is different. But you’ve got an option to buy that domain name when your company achieves a point where you can afford to but it. You raise money from an investor or a group of investors. Maybe you become cash flow positive and suddenly you’re making a lot of money. Maybe you get acquired by somebody bigger and they say okay, let’s get rid of that lease and let’s just buy out the name.
Alternatively, there are equity deals where there may be some cash, there may not be some cash but there’s an exchange of equity. Early on you had mentioned I was a founder in Hemp Box. I wasn’t the founder, I was one of the initial founders. When they were getting that idea off the ground, they came to me because we had hempbox.com and the way that we structured that deal was with equity. I came in, I offered a lot of my guidance and advice as somebody who has been extremely successful in the online media business and I give them my domain name in exchange for a piece of equity and helped to found hempbox.com. We’ve done many deals like that.
Shango Los: Circling back around to your own portfolio, what are some of the domains that you’ve collected that you think are going to be the winners? The goal here is not so much as to point out on how much money you’re going to make on these is that more so that you can model for folks what a successful portfolio would look like.
Andrew Rosener: We’ve got some great ones. The top of the pack is clearly mj.com, two-letter.com basically the single most valuable asset class on the internet. They’ve all been gone since the early ’90s. Basically, they have a liquid, absolutely liquid market in the seven figures. That’s definitely the biggest name we have in the cannabis base. Then we’ve got lots of great brands related to strains like bluedream.com, sourdiesel.com, chemdog.com, grapeape.com, afhganica.com. It goes on and on, hinducush.com. Lots and lots of the top iconic strain names. Then we’ve got more generic names like tincture.com or tinctures.com, shwag.com, strains.com, landrace.com. Then we’ve got some sort of more like clever phrases, something like passitaround.com or mycannabis.com or myweed.com, gosmoke.com, things like that.
Shango Los: I can see how each of these are actually appealing to a different segment of the market. Some of them might be used by an established company that wants to extend their brand into a slogan. Some might want to leverage a famous strain and others are just vocabulary that’s really common in the industry that someone could build their brand around. It sounds like by putting together a portfolio, you’re decreasing your risk by increasing the variety of what’s in the basket so all sorts of different buyers would be coming to you instead of just one kind of buyer.
Andrew Rosener: Absolutely, absolutely. You’re trying to get exposure to as many elements of the market as you possibly can. Any type of investing is about hedge your risk, making sure that you’re taking advantage of any of the opportunities so that you don’t go 100% down this path and then the success ends up down the other path. You want to make sure you’ve got exposure across the board.
Shango Los: Let’s talk a little bit more about the buyer. If choosing the right way to sell your domain names is such an important aspect of making money, what do you think is the best way to go about it? It may be a case-by-case basis because you can sell through broker sites, yourself on an auction, or you can do direct sales by reaching out to a company that you think is a good target for it. How do you think is the best way to be getting the most for these domains that people are collecting?
Andrew Rosener: I think on a case-by-case basis it differs. On a very high value domain name, I think it’s generally best to use a broker. There are a lot of variables, a lot of sensitivities to negotiating a high value domain transaction. There’s a lot of education involved generally in terms of why is this domain worth that much. There’s intricacies involved in the transfer. Obviously, people are much more concerned about risk when it’s a high value dollar amount. On anything $10,000 or more I think using a broker is probably intelligent. I don’t think auction sites are necessarily the best way to say a cannabis-related domain name today just because I don’t think the market has evolved yet to where it should be where there’s enough liquidity in the market to say, okay I’m going to roll the dice throw it up on an auction and hope for the best.
In terms of direct sales, it’s just up to the individual. Some people are good at sales, some people are comfortable with sales, some people are comfortable getting on the phone and discussing things with people, some people are not, a lot of people are not. I think that’s just up to you. If you’ve got a good domain that you think you know who some of the great users are, email them. Send out some emails, makes some phone calls, try to network a little bit, and see if somebody wants to buy your domain.
Shango Los: I know that in the early days and maybe even still now, you’ve actually been on the phone yourself calling the decision makers at these companies who you think are a good target for your domain name. Do you find … I can imagine that some people might think that that is a hoax or something and that wow, you’re actually bringing me this domain I’ve always dreamed of. How do you get over that hump into believability with whoever your target is?
Andrew Rosener: It all comes down to reputation. I just tell people look, Google my name, Google my company name. We’ve got an exceptional reputation. I sell domain names to … I’ve sold Mark Zuckerberg a domain name, I’ve sold Elon Musk domain names, you name it. Basically, I’m the top domain broker in the world. Pretty much I’ve sold domains into every category of every business and service known to mankind around the world. If trust becomes an issue, I just basically say here’s a contact, call these people or Google my name, look at what people say about me, look at what I’ve done. That’s basically what it comes down to but ultimately yes, domain names and people that own domain names for speculative purposes, there’s still a bad reputation out there which shouldn’t necessarily be the case anymore. It’s not about trademark squatting anymore. The value is in these generic high value brands.
Shango Los: That’s a really good point for new entrepreneurs to make sure you keep your own personal name brand clean and make sure people are saying good things about you and referring you instead of bad things. It’s time for us to take another short break. We’ll be right back. You are listening to the Ganjapreneur.com Podcast.
Shango Los: Welcome back, you are listening to the Ganjapreneur.com Podcast. I’m your host Shango Los and our guest this week is Andrew Rosener of Media Options. Andrew, before the break we were talking about how to know when you’ve got a good portfolio put together. I would think that there’s a certain time to give up on domains that you’ve been paying dues on for a couple of years and you’re realizing, oh man, this is just never going to make me money. How do you decide when there is a dog in the basket and you just need to stop paying on it?
Andrew Rosener: Good question. We get a lot of people almost every day emailing us with lists of just terrible domain names that have no value to anybody. Ultimately, I think when you’re evaluating your names, you look are the words in the wrong order. You know, dream blue is not the same as blue dream. Are you getting clever with some kind of prefix or suffix that really today has no value even if you think somebody someday might want that.
At the end of the day you’re paying ten dollars a year on average to maintain these domains. If you’ve got a hundred of them, that’s $1,000 a year. After a couple of years, that starts adding up. That crap domain that you’ve unless you’re going to sell it for some multiple of those thousands of dollars that you’ve been paying to maintain the overall portfolio, you’re not even going to make up even if you sell one name for $2,000, you’re not making up for the renewal fees you’ve been paying on the rest of the crap portfolio for years. I think if you’re not getting inquiries, if it doesn’t have any traffic, if it doesn’t have immediate intrinsic value and mind share, then it’s probably not worthwhile.
Shango Los: I’m sure that we’ve got quite a few listeners who tuned into the podcast because they themselves have collected a handful of cannabis domains and now from listening to you, they totally get the example of this is real estate and so now they may be excited to buy some, I guess what I’ll call after market stuff that’s not $8.99 on Go Daddy anymore. Investor to investor, what advice would you offer people who want to get deeper into domain investment … how to start out and get professional.
Andrew Rosener: First and foremost ground rule number one, having one premium domain that cost you $1,000 is way better than having 100 crap domains that cost you $10 each. Ground rule number one. Don’t go out and try to register your domain names because honestly like I said, unless you found some trend and you’re getting the exact match .com domain name for that trend and even that, trends are fleeting. It’s all about timing.
I would focus on buying a premium name that has staying power. If it costs more than you’re comfortable with, get comfortable. Buy the one name and don’t go out and buy a bunch of crap smaller names. Buy the right name from day one. When you sell that, take some money off the table or just double down and then go out and buy two more. Always, when you’re looking to invest in domain names, always focus on am I improving the quality of my portfolio? Does this incremental investment increase the value of my portfolio? Is it better than the domains I already have in my portfolio or is it going to drag down the portfolio in terms of overall quality average. You’re always looking to push the average quality of your domain portfolio up.
Shango Los: That’s really great feedback. Now that they’ve built this and they want to sell then, you’ve mentioned that working with a quality broker is a good idea because yes, you’ve got a website but really it’s about the connections that you’ve got and being able to connect with people like Elon Musk to be able to sell these premium domains. After you have a portfolio and you’re ready to sell a couple, what questions should you be asking a broker to make sure that you’re choosing a good one?
Andrew Rosener: Unfortunately, there aren’t a lot of great brokers out there. Basically, you want to make sure they’re not trying to buy the domain themselves to flip it. If they are, that’s not necessarily a problem, you just want to make sure that it’s transparent. You want to make sure you’re paying a fair fee which is generally between 10-25%, it depends on the value, it depend on the name. If it’s a smaller name, the commission is probably going to be higher. If it’s a very large name, the commission is probably going to be smaller, the rate of commission.
You also want to be giving them the appropriate tools they need like an appropriate ask price, an appropriate reserve price. You don’t want to be … If you’re shooting for the moon, you’re probably wasting everybody’s time. You want to put them in a position where they are set up for success. You’ve given then an accurate and meaningful ask and reserve price, you’ve given them and effective and sufficient amount of time to market your domain name exclusively and effectively. You want to be transparent with them about inquiries that you’ve received, providing them with contacts that you’ve gotten before. I think relationship is a lot. Get on the phone, have a conversation, make sure you’re comfortable with that person. I think more than anything, that’s probably the most important.
Shango Los: Right on. I can imagine that we’ve just encouraged and totally jacked up a whole bunch of people who are now ready to jump in with both feet. We’re wrapping it up here now, Andrew. Thank you so much for being on the show. I’m glad you could join us.
Andrew Rosener: It was great to be here.
Shango Los: You can find more about Andrew Rosener and Media Options at mediaoptions.com. You can find more episodes of the Ganjapreneur Podcast in the podcast section at Ganjapreneur.com. You can also find us on the cannabis radio network website and in the Apple iTunes store. On the Ganjapreneur.com website, you will find the latest cannabis news, product reviews, and cannabis jobs updated daily along with transcriptions of this podcast. You can also download the Ganjapreneur.com app in iTunes and Google Play. You can now find the show on the I Heart Radio Network app, bringing Ganjapreneur to 60 million mobile devices. Do you have a company that wants to reach our national audience of cannabis enthusiasts? Email email@example.com to find out how. Thanks to Brasco for producing our show. As always, I’m your host, Shango Los.