Toby Clements launched his own brokerage business this year after parting ways with his long-time business partner, Rick Latona. After just three months, Clements has already sold $1 million of domain names and is on track to close $2.25 million in sales by the end of 2011.
On this show, Clements shares how he sold so many domain names in such a short period of time, the tactics he learned as a third-generation car salesperson that also work for domain name sales, and how anyone can be a better salesperson. Clements also describes how technology will streamline his sales process going forward.
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Here’s your program.
Michael Cyger: Hey everyone, my name is Michael Cyger. I’m the publisher of DomainSherpa.com, the Domain Name Authority and the place where you can learn how to become a successful domain name entrepreneur directly from the expert themselves.
Most startup entrepreneurs I know have a bunch of domain names they own but are not using. I’m one of these guys to a degree as well. I buy a domain name whenever I have what I think is a brilliant idea for a new business, product or service. Eventually, like myself, most people will decide that they don’t want to keep paying the renewal fees and it is time to sell. And who better to learn sales tactics from than a car salesman. Someone who understands the sales process inside and out better than anybody else and knows how to get past hesitations and get to a yes? As it turns out today’s show has a car salesman – But not any car salesman.
Most domains are not used cars that have dings or barely run. They provide aspiration. They provide hope of what may be in the future or they are a one of a kind asset. When I think of cars of this type I think of Lamborghini or Ferrari. Joining me today is someone who used to sell Lamborghinis and Ferraris. Today’s guest is Toby Clements, a third generation car salesman turned domain name broker. Toby re-launched his brokerage business three months ago and has already sold $1,000,000 of domain names and is on track to close $2,250,000 by the end of 2011. He is going to share how he sold millions of dollars of domains in such a short period of time. The tactics he learned selling cars that also work for domain name sales, and how you can be a better salesperson.
Toby, welcome to the show.
Toby: Hi Michael, thank you.
Michael: Toby I like to start the show with a little background on the guest. Can you tell us how many domain names you personally own?
Toby: In the past I’ve owned tens of thousands but since I separated from my last business partner I’m down to the hundreds. I focus on more premium stuff now. So nowhere near as many as I used to but still have a decent portfolio.
Michael: So hundreds right now and when you say you focus on the premiums are those single word generics or are they brandables? How do you classify the premium domain names that you own?
Toby: Definitely single word generics, and also acronyms, LLL.com, NNN.com and things of that nature. Things that I know I can sell at the drop of a hat. If I need to turn anything to liquid I know I can reach into my portfolio and I can sell something in a blink of an eye whereas brandables, catch phrases, things of that nature you have to find the right buyer and that takes time. I like things that I can sell quickly.
Michael: Yes and if you looked at your hundreds of domain names that you own and you try to put a value over the whole portfolio what would you say roughly that value is, in the thousands, tens of thousands?
Toby: It’s in the six figures.
Michael: In the six figures. Is there one domain name that you love more than any other one that you own besides TobyClements.com?
Toby: I don’t think there is one. And I think that if there was one niche that I like is the LLL.com market. I have bought and sold millions of dollars in that specific market and of course LL.coms. I just like the short acronym names. They are easy to sell to the marketplace quickly and occasionally get an end user that knocks on your door that you can make a good lick on. That is what I prefer.
Michael: How many domain names do you buy per year roughly, you personally?
Toby: It varies. It’s not a lot. The bulk of my names I run through my list. Occasionally I’ll pick up names from people offering them to me but there is not a set amount. My primary focus isn’t buying domains for me. My primary focus it brokering for everybody else.
Michael: Let’s go back in time. I want to learn about your salesmanship. And from what I understand during our pre-interview call you learned salesmanship from your Grandfather and you father. Can you tell me a little bit about that?
Toby: Yes I am a third generation car guy. What I mean by that is my Grandfather was in the car business for 40 some odd years before he passed away in the ‘80s. My Dad is still in the car business and has been for 40 plus years. And I started in the early ‘90s straight out of school thinking that was my career path for life. All I had seen my entire life was cars, cars, cars and it was a natural progression for me. So being around my Grandfather and my father and all the other car guys in our lives through all the dealerships that we have had and everything I mean sales is just part of life. It was just the way we eat, sleep and breathe.
Michael: And you ended up taking a little deviation from the kinds of cars that your Grandfather and father were selling and moved into higher end cars. Is that correct?
Toby: I did. I started in ’91 with Ford and was with them for many years and then I branched out on my own for about seven years buying and selling cars at auctions. Flying all over the country, going to auctions, buying cars, filling up dealerships to that extent of the business. And then around 2000 – 1999/2000 I decided to go into high end cars. Lamborghinis, Bentley, Rolls Royce, Ferrari, you name it I’ve sold it, I’ve driven them. It was a fun gig. It was a really good time.
We sell domains for six and seven figures, I sold cars in the seven figures. Multiple cars. And so whether it is a domain or a car it’s a sales to me as far as I am concerned. But it was a really, really exciting time in my life to drive all those wonderful cars. And you meet a lot of neat people too. Dealing with actors and actresses, rappers and country singers, you name it. It was a fun gig. It was really fun.
Michael: So is there any famous person that you have dealt with or sold a car to in the past that you can mention their name on air?
Toby: It’s a pretty long list. I would say some of the nicest people that I met were some of the country music artists out of Nashville. But also some of the ball players like Alge Crumpler is a good buddy of mine. Albert Haynesworth. You know just several of them that I dealt with they are all great people. But the nicest group of people were the country music artists. Keith Urban, George Jones, The Rascal Flatts, we sold those guys some cars. Just a bunch of really, really good people. But overall they are all cool. They are all people. That is the reality and that is the way I treated them. Just like me they put their pants on one leg at a time too. So it was fun.
Michael: So Rascal Flatts walks into your showroom and Bentleys and Ferraris and Lamborghinis aren’t sitting outside. They are sitting inside in the showroom. They walk in what is the first thing that you do to try and get the sale?
Toby: Well guys like that, just like with anybody, you just have to treat them like a real person. And don’t be pushy. They either want it or they don’t. Somebody doesn’t walk into a showroom to buy a $500,000 car. You don’t push that on them. You have to just be there, be consultative, just answer their questions. In most cases the cool thing on those cars is the customer already knew everything about the car. They knew more than I did. If I am selling a Ferrari Enzo for $1,600,000 I mean I don’t know all the things about the engine and all these different things. I just know that it is a Ferrari Enzo and they sell for $1,600,000. And the guy that is buying it he knows everything about it.
So really you just befriend them and just hang out and just be yourself. If you try and put on an act or a front of any kind they are going to smell it from a mile away. They are not going to trust you and they are not going to do business with you. It is the same thing with domains. The name is what it is. The price is what it is. Everything might be negotiable so throw an offer out if you might want to make an offer but just be yourself and that would be the number one rule for me to anybody. The number one tip if you would, is to just be yourself.
Michael: Can somebody walk in, in the past, to your dealership and into the showroom and say you know I know that Ferrari has a $1,600,000 price tag but I am going to give you $1,100,000. Is that possible to do?
Toby: No. It’s possible but they wouldn’t get anywhere. Domains are amazing. I was just talking to somebody a couple of days ago, you can be $100,000 apart on a domain name and you are close to a sale. You know what I mean? It makes no sense to me what so ever. The cars, there is book values, there is different ways that people can tell what a car is worth, what they sold for. Domains are unique. A domain is worth what somebody is willing to pay for it. And you have to find that person and find out what they are willing to pay for it. So it is kind of a totally different scenario.
Michael: So back in your showroom when people would walk into your showroom would you immediately be able to size them up and say oh these are people just tire kicking or these are people that just want to sit in a Ferrari or these are serious buyers?
Toby: Absolutely. There is two things that you look for. Their shoes and their watch. Immediately that is what you look for. Somebody that can buy that kind of car they have got a $50,000 watch on their wrist and I promise you their shoes are brand new. And we did get tire kickers every day wanting to come in and test drive cars and we just have to politely decline because test driving those cars just didn’t happen. You want to test drive you can pull out your check book.
Michael: Alright I’m going to come back later in the show and ask you what the telltale signs are for people who want to buy six or seven figure domain names and what the equivalent is of a $50,000 watch. So we are going to come back to that. But the last thing I want to ask you about selling high end cars like Lamborghinis and Ferraris: You said a sales tactic that you used was just being their friend and making sure that they have all the information that they need in order to make a decision and to close a deal. Would there be any other sales tactics that you would use? I know that your father would probably say there are different sales tactics for a used car sales process than high end sales. Is that correct?
Toby: There really is. You treat each customer the same which that doesn’t matter what type of business you are in, or if they are buying $1,000 domain or a $1,000,000 domain. You treat them accordingly. You know with respect. They are doing business and that is all that matters. If I had to say another tactic I would just say know your inventory and know your market too. Know what domains…somebody is looking at a premium .com that you have know what some other premium .coms in that space, where they are at, what they are being used for, know where the .nets are. So you are preparing yourself for the objections. If you are trying to sell somebody a specific car and they go well I can go down the street and your competition has one.
I would go yes but you have to understand on that car doesn’t have this option, this option, this option and they are also asking $10,000 more than my car. So knowing that upfront completely alleviates their objections. You know it’s all about jumping hurdles in a sales process. You have to jump over hurdles. And if you know what those hurdles are ahead of the game you are that much closer to the sale.
Michael: That makes sense. Now whenever I go an test drive a new car, I think a month ago my wife and I went to a local dealership in Seattle and we were test driving a car because we had our third child about 10 months ago and we just don’t have a car big enough. The Prius we have just doesn’t cut it for three car seats next to each other in the back. And so we went to look for a larger car. And I swear it drives me crazy every single time but one of the first words out of the salesperson’s mouth is “Are you going to finance this or are you going to pay cash?” Like they want to know if I’m good for the money before I even have a conversation or take a look at the car.
Toby: Right, that is exactly what he is going. He is pre-qualifying you. The car business is what it is. All the sales guys they are not all nice great guys in the car business. Some of us are but some of them aren’t. And they ask pre-qualifying questions for reasons. They are trying to get to the sale and they are trying to figure out…If you are going to finance the next question out of his mouth would have been where you work? How long have you worked there? You know what I mean? And he is asking penetrating questions but in a friendly sort of way but he is totally sizing you up. And that is what everybody in the car business is trained to do. It is the way it is.
Michael: And are they also trained to try and close that deal that day? I noticed that they would say what can I do…Here is the tactic. They say what can I do to put you in the car today? And then when I say nothing I’m just trying to look at different cars to how well they fit my needs then they go get a sales manager and bring him out and he would sit down and say what can I do to close this sale today?
Toby: I don’t know what the statistics are but if somebody leaves your car dealership your chances are slim to none to get that guy back. So yes, ultimately it is all about selling right there on the spot trying to get you an emotional decision. It is smart of you, honestly in today’s day and age you don’t even have to go to a car dealership man. You have a laptop. We have our computers. We can find out where all the inventory is. We can compare prices. Especially on a new car. Used cars you have to go out and actually look because each used car is different. One might have a scratch here, a scratch there, one has higher miles, one has lower miles. New cars I wouldn’t even leave my house and I would have the car delivered to my driveway.
Michael: I have got to test drive it. I have got to put those three car seats in the back to make sure that they actually fit. And I can get the buckles between them. But yes I see your point.
Toby: Just buy the biggest Yukon they have and you will be fine.
Michael: See that doesn’t work up here in Seattle. We have got a lot of crunches up here.
Toby: I hear you, I hear you.
Michael: So I understand where you are coming from. Is the same true for domain names? If you get an inquiry on a Thursday are you more likely to close that deal within 24 hours?
Toby: Absolutely not.
Michael: If you don’t close it at all?
Toby: Absolutely not. I think strike while the iron is hot is important but I think it is a completely different process when it comes to that. Anybody who has dealt with me, which is a lot of people, they know that I am really direct. If you hit me up on a name and you make me an offer I’ll let you know once the is either accepted or denied or if there is a counter offer. But I won’t ask you to get on the phone and try and up-sell you and talk you into it and why you should do it and why you shouldn’t do it. It is just not the way I play. You either want the name or you don’t. You know your reasons for wanting it. You know what the name is. You know what the price is.
The reality is when you make me an offer on a name that is lower than my asking price you are risking loosing it to somebody who just says I’ll take it. And that happens a lot of times to me. And I hate it when somebody makes, if it is a $20,000 name and someone makes a $15,000 offer (a very reasonable offer) but then somebody comes behind you and says I’ll take it and then they come back and say hey what about my offer and I say I sold it. And they were like well you could have called me or emailed me and I am like no it doesn’t work that way. It’s first come first serve.
With domains it’s a little different than the car business. It’s not the hustle. The car business is a lot of hustling. It is shucking and jiving and all that kind of stuff. It is not that way with domains. And a lot of names you have to gather information about stats, traffic, revenue, all the different things about it for somebody that is interested. Especially if it is a six or seven figure name. And it is a process to sell that kind of name or that kind of portfolio. Totally different.
Michael: Alright so let’s take a step forward. How did you first discover domain names? You were selling cars. You were selling high end cars. How did you get into domain names?
Toby: I was having dinner with an old friend of mine and he…In fact in 2007 I was selling him a car. Rick Latona, my old business partner. And we were just sitting there having dinner and hanging out. I’ve known him my whole life and he asked me if I knew what a domain name was. And I said what the heck is a domain name? And the rest is history.
Michael: How did you and Rick know each other? Though car sales or you were friends before that?
Toby: We met when we were 16. We went to high school together. So we have known each other a long time. And he had always went the internet route where I went the car route. And his Dad and my Dad knew each other from the car business. So we knew each other that way as well, but no we were just having dinner and he casually mentioned it. And he mentioned why don’t we try to do something together. We had known each other forever. I’d love it if you would try and work with me. So I did it part time for…I gave him 60 days part time. Where I could kind of keep my day job and just see what I thought. And within 30 days I had made so much money that I never looked back at the car business. I literally left a 14 year career in 30 days.
Michael: That is amazing. So you were making probably a pretty good commission on Lamborghinis and Bentleys but you weren’t sell as many of them so it was probably a lot of highs and lows, right?
Toby: It was. It was a fun gig. I had a company Lamborghinis I was driving around in the nicest cars you could ever imagine for five or six years at the tail end of my career. And I was making good money. I was a six figure guy. But the domains it was like instead of having a car lot with 50 cars on it to sell all of the sudden I had millions of cars to sell. Right? And that was the way I looked at it. Why would I sit inside a car dealership, even though the inventory is beautiful, the clientele were wonderful, the cars were great to drive, but wait a minute. If I can have domain portfolios put in front of me and I can cherry pick these names and sell all of them that is like selling 20 cars a day. It made no sense to me to stay in the car business. None. And that is why I left so quickly.
Michael: Actually I have got one more question regarding the car business. What kind of commission do you make on selling a Ferrari or a Lamborghini, does it vary per car?
Toby: It does. It varies per car. It’s all about profit.
Michael: Is the commission set by the manufacturer or do you get it at a base price and you just mark it up?
Toby: Yes you get a base price and mark it up depending on what the profit is you get a cut of that as a sales person after the dealer gets his money.
Michael: And so some day I aspire to buy a Ferrari. How much more can I expect to pay from the base price that the dealership is buying it at?
Toby: Well every car has a sticker price. And you know that comes from the MSRP but there is a lot of room between the sticker price than what the dealers actual cost is. So some of them do tack money on to that but legally they have to tell you about that. It varies per car. Some cars in the realm have a normal car if the go to a Ford lot it might have $2,000 to $5,000/$6,000 mark up whereas a Ferrari or a Lamborghini they can have $40,000 or $30,000 mark up. It totally varies on the car and the equipment.
Michael: So you sat down for a meal with Rick Latona and he said give me 30 days, you gave him 30 days and sold more than you anticipated and you never looked back again. So when you started working with Rick what was your role and your responsibilities?
Toby: We partnered up. The responsibility was bringing domain names to the table. Searching out and finding domains that were available and that was what I gave him my part time for what actually emailing people to try and buy their properties. And we did very well so quickly that we ended up partnering up and forming a company that we basically found names together and acquired them. And over time I was doing so well with it that one day I just went to him and I was like why are we thinking of small time. Let’s get an army of people going this and the next thing we know we had 15 people doing it and that mushroomed into 20 or 30 employees and years down the road we had over 100 employees at one time.
Michael: And you were actually buying premium domain names. You weren’t just brokering, getting in contact finding people who were interested, listing them for sale, taking a commission. You were buying them.
Michael: What were you doing with them once you bought them?
Toby: Selling them.
Michael: So it was a buy low sell high.
Toby: That is exactly what it was. We were selling them quick too. But we couldn’t print enough money in those days. In those days it was very easy to buy them and even easier to sell them for massive profits. So it was a fun time in our lives. We did that for about a year and a half, two years and then in 2009 I guess it was whenever everything went down, the breaks just got put on. I mean everything changed. And so we went into a million different directions. We started countless companies just doing all different kinds of things just trying to keep that same flow and keep everybody happy within our organizations. So we had mini sites and the watch company and the diamonds and oil and all kinds of stuff. Rick is a serial entrepreneur, God Bless him. He starts more companies in a year than most people change their pants I think. But it was definitely a fun time.
Then a newsletter actually evolved from all the names we were buying. We needed a place to sell our names. And so over the years of Rick knowing a lot of people in the domain industry, and the internet industry in general, he started forming a list and we started marketing those domains and that kind of mushroomed in to people sending them to us and the next thing you know we realize there is a whole other animal here. We can broker people’s names. So we started marketing that aspect of it and it took on a life of its own. It was fantastic. We were brokering names every single day for people for years. We had a great reputation and the newsletter has the largest subscriber base by far of anybody out there of real pure true domain buyers. And so it was out me and Rick having dinner that one night that just kind of naturally progressed into what the newsletter is now today.
Michael: So over the course of two to three years you and Rick started a newsletter that grew to the size of about 15,000/16,000. Is that correct?
Toby: Correct. Yes.
Michael: And that was just from people who you had reached out to and bought domain names from or you sold domain names to or people hearing about you doing the business and they wanted to find out what domain names you were selling?
Toby: It wasn’t easy building the subscriber base.
Michael: It is an enormous list. That is what I wanted to ask you. For other people who want to do that how do they build a 15,000 subscriber newsletter list in a couple of years?
Toby: That is no easy task Michael. It’s not. There is no easy answer to that. It took years of Ricks marketing efforts, branding efforts, my efforts of finding people to sell the domains to as well as you have to think back that Rick and I owned an auction house together and we traveled around the world. We held I think eight or ten auctions in Europe, in Australia, in Canada and just all over the world. So we also acquired everybody’s email address that came to those conferences and that of course was a big shot in the arm. So it is no easy task. The answer to your question is to start an auction house and do auctions all over the world. But without buying names, which I have never done, without buying email addresses, which I don’t think would be productive to be honest with you because most people they don’t know what domains are worth and I don’t think it would get me a lot of sales, which is why I haven’t done it. But it was no easy task. It was years of true hard grinding. And a lot of handshaking.
Michael: That makes sense. So the economy started to take a downturn in 2009-2010 and you and Rick decided that (correct me if I am wrong) the cash flow wasn’t strong enough as it was in the past to support the entire enterprise that you had built, all the employees and everything.
Toby: The cash flow was strong enough but it wasn’t as big of a waterfall as it had been.
Michael: And you decided to just close up shop because of that?
Toby: No the auction house – one thing that we always thought about with the newsletter and having a ‘buy it now’ price versus an auction format is that we were leaving money on the table. Typically, I know that I had done my job well when I sell a domain name and I only have one maybe two takers on the name. If I have five or ten people that say I want a name I know for a fact that I have underpriced it and it is gut wrenching. I still sell it. I have never backed out on somebody but it is gut wrenching to me when I do that. But it is rare. I will be honest. It is very, very rare that that happens.
That being said we were in the process in the building an online platform for our auction, for a live auction house, to use when we were where ever doing a live auction. Kind of like a proxy bid or any of the other companies that host online auctions. So once our platform was build Rick had the idea of doing online auctions rather than the newsletter. I was not a fan of the idea. I didn’t want anything to do with it but Rick was the CEO and the decision was made and we closed the newsletter, went to the auction format and it caused a lot of waste. It caused a tremendous amount of waste in the industry. A lot of pissed off people. Pissed off might not be the right word buy definitely are you nuts? I think I read that comment a half a million times or something.
And then eight months later when I decided to part company with Rick it was brought up for me to exit with that list plus some other stuff. And I was all for it. As I ran the newsletter before…Rick ran it for a long time in his defense as well but I took it over and ran it for the tail end of its life so I was really familiar with the audience. I was really familiar with domain value because I was the one that appraised all of the domains anyway. There was a point where I was getting over 10,000 submissions a week, every week. I looked at that many domain names. Nobody else in the company could look at them but me because nobody knew the values like I did (or Rick but he didn’t have the time). So I would have to stare at these domain names all day and pull out which every ones which I thought would sell. All the other ones I would reply back saying no thanks.
You do that for a couple of years I promise you, you are going to know the value of domains. I am not saying that I am always right because I’m not. But I’m right a lot of the times and so kind of the rest is history. When I exited I took a month off of work. Played golf, hung out. Which is the first month in my life I have ever taken off of work which was fantastic. And then I kicked in and 90 days later I crossed $1,000,000 in sales.
Michael: And that is an amazing number. To sell $1,000,000 in sales and most brokers charge a commission of about 15%. Is that correct for you as well?
Toby: It is the same with me. I do a lot of smaller sales as well. I also have a minimum commission of $250. So it is either/or.
Michael: Do you know roughly how many domain names that $1,000,000 encompassed?
Toby: That is a good question. I’d have to pull it up as we are sitting here to check.
Michael: That’s okay. I thought maybe you knew offhand. Okay so you and Rick parted ways. You took a month off. You purchased this, or you took possession of this newsletter subscriber list of 16,000 email addresses that you and Rick had built up over time. How instrumental was that newsletter subscriber list to you in selling $1,000,000 in domain names in three months?
Toby: It was the only reason that it happened. I knew the bulk of my…of course I have the big subscriber base but it’s a small amount of people in there that buy a lot of the names. And so I knew those guys already but that data base is the sole reason I am as successful as I am today. Period.
Michael: So lesson learned for anybody that wants to get into brokerage you either better partner with somebody who has a large newsletter data base or of email addresses or start building your own up.
Toby: That’s it.
Michael: So walk me through this. When you started up your business what was it? Was it just you and this newsletter subscriber base or did you bring on employees? How did you start it up?
Toby: It was simple. I formed the LLC and I brought one employee who was my PA from Latona’s. I brought him over with me to run all of the back end. His name is Mike, a lot of you know him because you get emails from him. He closes all the deals, transfers all the names, builds the newsletters. Basically my role is acquisitions and sales. I’m a firm believer of surrounding myself with people that know what they are doing especially if it is something that I don’t know what I am doing. If they are better at it than I am I want them doing it. And right now I have four employees. So I’m kind of a one man army compared to what I used to be. In the past if somebody wanted me to go out and reach out to end users, I had a whole team that could do it. Now you know it is a little bit different. It’s a good core group of people that I have in my camp right now. And I am building it very slowly.
Michael: So there is you. You buy and sell the domain names. Then you have Mike that does all the administrative work. He makes the business function. He builds the newsletter and sends it out. He takes the money. He transfers the domain name. He communicates once the sell is actually….you have an agreement. Who else is in your organization?
Toby: Another guy’s name is Kevin. He is our programmer. Kevin is responsible for building a back end system for my company. Four example about two months I announced that I had built in a follow up system because in the newsletter business, one thing that was lacking so heavily, with me included and other newsletter people that are out there (because I talked to them about it) we get so many submissions that typically what would happen is we would list the domain one time and if it didn’t sell we moved on in life. Or I did. I moved one. The only way that I would have a name in my reduced section, the reduce until sold section, is if somebody contacted me back and Toby I guess my name didn’t sell can you lower the price? I’d say sure. Finally I was just sitting around thinking about it and I was like God forbid I be a professional and follow up with people.
Michael: I know these people are sending you their domain names and they have no idea what is going on.
Toby: Right, people are sending me their assets, real assets that they are allowing me the privilege of brokering them, God forbid I follow up with them, right? So I put together this system that automatically emails somebody if their name does not sell within 72 hours. They get an email saying thank you for allowing us the opportunity unfortunately it didn’t sell. Please reply back with a lower price and we will add it to our reduced section. Since I’ve implemented that I’ve went from having four to six names a day to as many as I want to put in it. Right now I probably have 200 or 300 in the queue. I only throw 25 – roughly a day, 25 or 30. It’s increased, it’s double my sales. Overnight doubled my sales.
Michael: And when did that launch?
Toby: Roughly six weeks ago maybe?
Michael: So in the three months where you sold $1,000,000 about half of that you have had this new automated system that communicates well with the seller?
Toby: Correct. And this is going to be a big system. It isn’t just a one system deal with this programming. I am actually building an entire system that can basically run a newsletter from a follow up standpoint. And I am licensing it. My lawyers are on that. I’m definitely building something. And it will be great. It might be something I’ll lease out to the other newsletter guys. I might lease it to other newsletters that aren’t even in the domain industry because the reality of it is I know for a fact what they are doing and it’s not the way to treat a customer is what it boils down to.
Michael: It sounds like a great idea. I’d love to hear more when it launches. I asked our readership to send in some questions if they had them for you Toby and Brian Smilks sent in “Once you are listing appears in the newsletter how do you get the status of any bites of the name?” So what you are saying is if I send in a domain name to you and you agree to list it 72 hours later I’ll get an email back saying what exactly?
Toby: The email that comes three days later basically says we appreciate you giving us the opportunity to sell your assets. Unfortunately we didn’t get any action. If you would like to lower the price let us know. That replies back to my admin department where Mike or Kevin will get it relisted in the reduced section. If somebody shows an interest in a name you will get an email from me. If you have a $10,000 name and somebody offers $1,000 you are going to know about it.
Michael: So people will know automatically, or very quickly if there is any interest in the domain name?
Toby: If that is a sale. And I promise you and I promise everybody who is listening to me if there is an opportunity for a sale you will hear from me. That is why I do this. That is why I get out of bed in the morning. If somebody makes an offer on a domain name absolutely you are going to hear from me.
Michael: And is that process automated as well? If I say I’m interested in this domain name for $10,000 does that go into the system or does that manually have to be handled by you or your team?
Toby: For the moment that is manually handled by me, but to answer Brian’s question, to add something to it, part of the back end system is going to give my subscriber base the opportunity to have an account with us. They are going to be able to log in and see their names, see if there has been any offers, see how much time it has been, basically they are going to have their own page. That is where we are heading. It’s not there yet, it’s not even close. But that is the thought process.
Michael: That is a great vision of where it can be. So right now how many submissions of domain names do you receive per week?
Toby: It varies. I would say anywhere between, some weeks are 3,000 or 4,000 and other weeks are 5,000 or 6,000 plus. You know I get a lot of large portfolios so that is all counted into the mix as well.
Michael: Let’s say 5,000 per week. And you probably work seven days a week, but let’s call it five days a week. That is 1,000 domain names that you need to go through every day.
Michael: How long does it take you to go through 1,000 domain names and determine valuable/not valuable, will list/will not list?
Toby: I’m pretty fast man. I’m really fast. I can scan a list quicker than most only because I have done it for so long. And typically speaking if I open a portfolio and the first hundred names are junk then the rest of it is junk too. It is so unlikely that somebody has…if you send me 1,000 names and the first 100 are bad it is so unlikely (I have a better chance of getting struck by lightening) to have that diamond in the rough. Or a needle in a haystack. It just doesn’t exist. If it did exist he would have already told me about it. So when you are looking at large portfolios or these big websites that have a bunch of domain names for sale, just click on what their premium names are. If they are not premium then the rest of their stuff is typically junk too.
Michael: So you can blow through a list pretty quickly with that? You don’t even take a look just in case they…?
Toby: I did for a long time and it’s a waste of time. I did for a long time, for a couple of years I would literally look through lists. Sometimes people would send me portfolios with 10,000 names. And come on. Your eyes are going to bleed when you are looking for a name, just junk for that long you just want to just jump out of a window. And it’s a waste of time. I know it is.
Michael: I have another question here from a great audience member, Homero Gonzalez. I apologize for not getting your name right, I’m probably not pronouncing it right. I probably butchered it but you are valued and thank you for sending in the question. So Homero wants to know “How do you choose the domains that go into your newsletter? What specific criteria do you use?”
Toby: First of all Homero is an extremely nice guy. I know exactly who he is. And I don’t think he would mind which way you said it. He is such a nice guy. Names just have to make sense Michael. If they don’t represent what you are trying to come across to build a website or form a company then it’s just not worth much. And I see this all the time where one example could be golfcarts.com. It is a fantastic domain name, right? But whiteconvertablegolfcarts.biz is not a good name. The domains just have to simply make sense.
Michael: But your examples are like too far extremes. Golfcarts.com fantastic. Golf carts for golf courses, golf carts for retirement communities where the old people don’t want to walk around. But what about white golf carts? Or what about golf-carts.com. I know the .biz and .net they are hard. What about the middle ground? What about that gray area?
Toby: Good question. Very fair question. Golf-carts. Names with a hyphen. Still has value for sure but the value is going to be in the mid three figures to maybe $1,200. Somewhere in that vicinity is what it is going to sell for. For example I tried to sell Florida-keys.com the other day. Fantastic hyphen domain name. I couldn’t get $6,000 for it. Okay? What would Floridakeys.com be worth? A lot of money. So there is a gray area for sure. Maybe my example wasn’t the best in the world but the truth of the matter is I accept names that are keyword rich that make sense. Whitegolfcarts.com I don’t really like it. Most golf carts are white. We know that. There are convertible golf carts too. Convertiblegolfcarts.com still has value, a little bit, but just nowhere near what golfcarts.com does.
Michael: So how do you value golfcarts.com? How do you put a price on golfcarts.com if you want to value golf-carts.com?
Toby: Well hyphen names they are just…you don’t have to do any type of research at all. Golfcarts.com I’m not going to put a number out right now but because I would check the search volume on that name. That is a rock solid name. No question about it. Definitely one of the biggest things that I noticed from when the newsletter closed to when I re-opened it, literally in that short of time people are dependent on search volume more than they ever have been. When I got all my submissions before very few people talked about search volume and it gets this amount of exact searches and this and this and this. Now it is a regular thing that I see. So a lot of people base that or they look at that to see what the name is worth.
So to all the people out there that are trying to buy names and they are not quite sure what it is worth definitely search that. Use SEMrush.com or GAKT. I mean there are a couple of different places you can go and it is very important. Look for exact searches. Don’t do the broader board or whatever it is which gives you some ungodly number. Look for the exact keyword searches.
Michael: Google Ad Words, Keywords Tool (the GAKT). So when you look in SEMrush or Google Ad Words Keyword Tool and you see – I’m just going to make up a number because I don’t know what it is for golf carts as an exact search. But let’s say it’s 40,000 exact match local monthly searches, local being U.S. What kind of price tag would you put on that?
Toby: Well I wouldn’t strictly base it on that. I would do a little bit more homework on the name just besides the searches. I would with a name like that immediately I would think it has been used before and I would find out if there is any traffic or any back links or things of that nature as well. If I just had to pull a number out of the top of my head on that name – would it sell for $75,000 or would it sell for $125,000 I don’t know. It could. It could even go higher than that. It’s a heck of a name. But with basing the search volume on an actual dollar amount that is not really the way I look at it. And I understand why you would ask that question but there is kind of more to the method with me. It has so much to do with that name and what it’s potential could be.
Michael: So pet rocks while it may be searched for a lot it doesn’t have a lot of potential in terms of being able to build a big business or a product or a service on top of it as opposed to golf carts?
Toby: Petrocks.com I would love.
Michael: It is probably searched for a lot because it was big in the ‘60s or ‘70s or whatever it was.
Toby: Not only that Michael but it is also a fantastic ecommerce business. The pet rocks are small enough to ship. When you are thinking about starting a business online think about something that is small that you can put in a box that you can ship off to people. If you are selling flags, flags.com or then you can go with American flags, Mexican flags, you could go on all those and that can be a massing ecommerce business because they are lightweight, cheap to ship. And when you said pet rocks the first think I thought was ecommerce would play in that.
Michael: What I thought of immediately after that was orangejuice.com. I think I saw it on NameJet for auction a month or two or three ago. I’m sure it sold. I don’t even know if it sold in the five or six figures. But you can’t ship orange juice. You know it is a great domain name for a company like Tropicana that makes orange juice, that is expecting people to type it in and come directly to their website. How would you put a price tag on that one?
Toby: Well food domain names are kind of their own animal. In the past I’ve owned plums.com and a couple of other names and I think I sold plums.com for $28,000/$30,000 a couple of years ago. Lemons.com has been on the market for quite awhile. The guy wants in the upper five figures I believe still and it is not getting there. It is a great name though. Just because it is just lemons. It should sell in the mid five figures but you are not going to sell lemons. They are perishable, you can’t ship them anywhere. I don’t know what you would do with the site. But food names like that, bananas.com, oranges.com, they will all sell. They are all good names. But like you were saying with orangejuice.com your hope is that Minute Maid or Tropicana knocks on your door one day.
Michael: I still don’t understand how you put a price on domain names. You look at the search volume. You look at the history of the domain name. Maybe it was used for a website. Maybe it has some inbound links. It has some good traffic. You look at the potential of it. Can you actually set up an ecommerce and do drop shipments or shipments or is it a food domain where it sort of represents your brand. But how do you set a price tag? Are you looking at comps in the market either using a tool or using your previous experience to set a price of the domain name that you are listing?
Toby: Honestly man it is 90% gut. I’ve looked at so many names and for so many years. And it’s 90% gut. I do check search volume on stuff occasionally. But most of the time I can look at a domain name and I know what it is worth. And like I said I’m not always right.
Michael: So most of the time you will get one or two bidders on a domain name that you set the price and you know you screwed it up when you don’t get any bids or you get five people wanting that domain name at a price.
Toby: If I price the domain right I’ll have one guy buy it. I know for a fact I have truly done my job. And more often than not that is what happens when I sell a name. I have basically in my mind I have found the person that will pay the most for that name. So I am representing my client well. Now when I have a situation where I have 10 people say that they will take a name I know I have screwed up. And you know how bad I have screwed up who knows? I sold a name the other day, a cheap name, it was like $900 or $800 but I had like eight people on it. Maybe I wanted $500 maybe I left $1,000. Nothing crazy but I left some money. So it happens but that only happens every month or three.
Michael: Sure and is it a mistake if you price a domain name and you don’t get any response at all or is it just the fact that your list is only 16,000 and you can’t find the right people who have an interest in that domain name?
Toby: I think that means that it is a little over priced and does that mean that I did something wrong? No, because a lot of times I’ll put names out there at a number that I don’t think it will sell at. A couple different schools of thought there. First of all it is kind of like shooting for…put it up in the clouds because you can always bring your price tag down but you can’t go up typically. Another thing is I’ll put ultra-premium domains out there at crazy money. If they sell it is a bonus but it adds value to the look and feel of my newsletter. When I put out a really, really ultra-premium name with a big huge price tag people are like wow that’s crazy. And then the next time they get my newsletter they open it up because they can’t wait to see what is on there next. I don’t feel that I haven’t done my job.
In a lot of cases I have to go with what my client wants to do. If they want $20,000 for their name and I tell them that we should list it at $10,000 and they are like well let’s start it at $20,000. You know a lot of times I will go with the flow depending on the name.
Michael: So a lot of newsletters that I get, because I try to follow the industry, it will say send me your names and send me the price that you want. Do you do that as well? You ask for what the client’s pricing…?
Toby: I do and there is as simple philosophy behind that. If you send me domains without prices and I take my time to go through the list, if I have to do research it takes time out of my day. If I have to do all this work, I put the numbers down and I send it back over to you and you send me back an email going Toby you are crazy. I can never sell these names for this price? I want five times what you are asking for. So basically I have just completely wasted 20 minutes of my day which I can never get back. Do you see what I mean? And so the logic behind getting the prices up front is if I think the price is reasonable then I will do my homework. Then we can talk about it because a lot of times people unfortunately are not reasonable with their price expectations.
Michael: Right, most of the time people aren’t reasonable. Like if I send you a domain name caboozle.com and I say Toby I want $3,000 for that you will respond back and say…
Toby: I will respond back and try and be extremely polite about it and just say Michael I appreciate you sending this over to me unfortunately we are not going to be interested in listing it. I wish you nothing but the best.
Michael: Would you actually tell me that caboozle is overpriced?
Toby: If I feel that the name has some merit then yes. But is the name has no merit and it is a high price we are not even talking at that point. But if it is a good name but it is overpriced a lot of times I will say ‘due to the price we are not interested in listing it’. And typically that will gain a response to where that person will come back to me and say well what price do you want? And then depending on how far off we are I’d have to form my other email that says ‘Hey sorry to bust your bubble but here is the number’. And it might be a third of what the guy wants. But it is part of my daily routine.
Michael: Do you ever have people send you a domain name with a price that you feel the price is too low? So you say hey I’m going to list it but I’m going to list it for 5x what you said?
Toby: Absolutely. It definitely happens and there are many people out there who will attest to this that I have sold names for more than they send them in to me for. At the end of the day I get paid more if it sells for more. It’s in both of our best interests for me to sell it for the most money.
Michael: So walk me through the process. I have a domain name, I send it to you Toby, I include a price, you take a look at it within roughly how many days of receiving it?
Toby: You know I get a lot of emails. I get 200-300 emails a day plus and a lot of names to look for. So a lot of times I’m behind especially since I travel a lot too. Typically you will get a response the same day or the following day. Sometimes it is two or three days. But basically I get back to you, I say hey great, we are going to run the name for you. I basically break down a little blurb about all of the rules, about our commission, we have a 30 day exclusivity on the deal. And I also mention that I might utilize other brokers out there to sell their names too. And then we run the name on the newsletter.
Typically it will go up on the newsletter within a couple days. Sometimes the same day just depending on what time I get it in. And how many names I have in the queue for that day. Sometimes I’m backlogged with names other times I need inventory that day. So it just depends on when you happen to hit me. We run the name once. If it doesn’t sell three days later they will get an email to put it in our reduced section. Any deals that come in in the meantime, any offers, them I will reach out personally and talk to you as the seller and I’ll negotiate on your behalf. Which is another really, really cool thing. There is a little negotiation period with me on the upfront to set the price. Once that is done though I’m in your corner and working to sell your name.
Michael: So you send me the rules back, after I send you the list, and you say there is a 30 day exclusivity that means I can’t sell it on my own. Or I can’t go to another broker. Do I actually have to sign something in writing or is it just by email I respond back saying okay and that is a contract?
Toby: It is a simple email agreement. I do have a longer term contract that we had drawn up for bigger names that I want for a longer period. But on the quick newsletter deals it’s just a simple email agreement.
Michael: So you negotiate. You sell my domain names for let’s say $1,000. How does that transaction actually occur?
Toby: Well we just basically when somebody says that they agree to buy the name I get Mike involved, my guy. And we close the deal down. Typically we act as the escrow on probably 90% – 95% of our deals. My company acts as escrow for basically a convenience to my customers. We don’t charge any additional fees for this. But if somebody does not want to use us for escrow we can use different companies such as escrow.com. Which I use them on a regular basis for other deals too.
Michael: If it is a really large transaction, you know $50,000 or $100,000, $500,000 you probably want to use escrow.com. No offense to you but just to have a third party involved or up to four parties involved in the money.
Toby: I’ve had a couple who do that. I did a $110,000 transaction through my company two weeks ago and a $60,000 one yesterday. It varies. There are some people out there on a $2,000 transaction that want to use escrow and I’m like you are paying the fee.
Michael: Exactly so the buyer wires or transfers or gets you the money. When you receive the money then you come back to me as the seller and say go ahead and transfer this domain name to this person at the same registrar?
Toby: Correct, at the same registrar or you might have to unlock it and move it to a new registrar. If it is at the same registrar it is instantaneous in most cases. If it has to be unlocked you provide an off code and then we get the new owner to pull it into his registrar which can take up to five days. And then that is it. As soon as the new owner gets the name and they confirm that they have the name we push you your portion of the deal. We take our commission out of it and send you your money. Nice and easy.
Michael: Sounds pretty easy. So in Monday’s newsletter, just this past Monday, you wrote “There are several hyphen names that are priced right, Outdoor-Grills.com, Hamster-Cages.com (which I’m sure my nine year old daughter would love) and Wicker-Furniture.com are all priced at $1,000.” Why was $1,000 the right price for Hamster-Cages.com?
Toby: Well if you were to buy a HamsterCages.com which I think I bought probably (I have four kids) but I think I bought eight probably along with all the other goodies that come with hamsters. Hamstercages.com would be a fantastic little site. Hamster-Cages is nowhere near what Hamster Cages is worth. But as I said previously, I think hyphen names sell for around $1,000. I think it is the magical number. As long as they make sense like Hamsters Cages wouldn’t be good though.
Michael: Value: $5 hand registration, right?
Toby: There you go.
Michael: But hamster-cages does have a lot of value. Good product, good service names with a hyphen you’ll say the basic price is about $1,000. It could be a little higher, it could be a little lower.
Toby: Correct, correct I think that is spot on.
Michael: I also saw listed in there, I know people hate it when I cherry pick just different names from their list but I saw cowboyposters.com for $3,000. I can’t remember the last time I wanted a cowboy poster but do cowboy posters exist?
Toby: There’s several different things it could be. It could be for like western cowboys. It could be for Dallas Cowboys, there are different cowboy sporting teams. Me personally I don’t want a cowboy poster either. But you know what somebody out there might. It didn’t sell so maybe people don’t. It’s not a bad domain. I don’t think it’s a bad domain at all. If I lowered the price a little bit it would probably sell.
Michael: I know people love it when I ask them about their domain names or the domain names that they had to sell. I just ran Rick Schwartz’s interview and I stumbled upon that Rick owned that was 5-1.com. And I said Rick why would you own a domain name like 5-1? And he is like gambling. It’s the odds 5 to 1. I was like oh yes. There are a lot of them where I just don’t see why there is value in a domain name.
Toby: And to add to that that is one thing that a lot of people have had to show me in the past. Sometimes I don’t see the value in something like that. 5-1 I picked up on immediately but there are some names that I will ask people…they will want $10,000 and I’ll send back, I’m like what am I missing? That is all I say. What am I missing here? And they will tell me and it’s kind of neat when they come back and it is something like 5 to 1 odds. And you are like geez.
Michael: So you get thousands of domain names sent to you in these portfolios. You take 25 of them and you list them in a newsletter. You send out your newsletter five times per week. Is that correct?
Toby: Four to five times, correct.
Michael: Four to five times. So how do you choose the domain names that go in there? I see domain names that are as low as $150 up to hundreds of thousands of dollars. Do you provide a broad range on purpose? And how do you actually select which domain names go into which newsletter?
Toby: Really it’s all timing on what goes where. As I accept the names I send them over to one of my guys and they have an ongoing list of names that we have to run in the newsletter. So basically every morning they wake up, they pick the next 25 names in line. Now there are certain times when I will push a name up to the top of the list purposely. It could be that it is a really, really solid name that I know will sell. It could be somebody out there that has asked me to push it up which I’m normally not opposed to going for people occasionally. There is no real rhyme or reason on the price ranges. That just kind of comes as we get to them. There has always been a very, very big price difference in the newsletters. Always.
Michael: And you find that is beneficial because you never know if you are going to have high end buyers or low end buyers in your newsletter?
Toby: Yes and the reality is I love the little names. A lot of brokers out there they don’t mess with them. I’m a firm believer that singles will win the game. And if you keep hitting singles all day long you are eventually going to hit a grand slam and you are going to home runs and doubles and triples. And so I like those little names that in there for $500 and $2,000. I’ll sell them all day long.
Michael: How much do you make on a $500 domain name?
Michael: $250, and if I have a $300 domain name you make $250?
Toby: Typically I’ll split. I’ve done it several times. People don’t ask me to I’ll just do it. I’m not going to give somebody $50 man for sending me money.
Michael: So of the 25 you list per day how many do you sell within three days?
Toby: It varies. It could be one or it could be six. We sell a pretty decent amount of names. Some weeks are better than others and one day you will have an ocean of deals going and the next day you might not sell anything. But typically just because of the amount of newsletters that I send out, typically I do a sale everyday but it could have been from a newsletter a week ago.
Michael: So tell me about the negotiation process. I see a domain name on your list. It’s listed for $10,000. I write to you and I say Toby I’ll give you $4,000 for that domain name via email. What is the next step?
Toby: Well there are two steps. Normally I’ll talk with the seller first. Let the seller know the offer is on the table. See what they want to do. They might want to sell it for $6,000. So if that is the case let’s say they say Toby I’ll take $6,000 for the name. I would go back most likely and counter with probably like $8,000. It is a reasonable discount from $10,000 but still leaving plenty of cushion. If the seller did not want to take a lot less money, let’s say he would only go to $9,500 then typically what I would do is go back to that buyer, not even offer a counter but say something along these lines: I know my seller well. I know he wants more for the domain name so in order for us to have the best opportunity to close a deal together I would recommend that you come in a lot higher. Would you be willing to raise your offer to $8,000 or $8,500? If so I would be happy to give him a call.
Michael: So you are not committing to $8,500 you are saying if you can come back and offer that I will go back to my seller and see if he or she is willing to take that?
Toby: Correct. You are doing two things. This could happen in a sale where you are that far apart or let’s say somebody emails you and offers you $8,000 for the name. And it is a $10,000 name. The last thing you want to do is say no to that $8,000 offer. If you say no then he is not obligated to honor the offer anymore. That is the rule of business. That is the rule of sales. So if by going back and basically saying to him listen I know my seller, we are probably close on a deal but you need to raise your offer up a little bit more. Can you come up to $9,000. If the guy says no technically he is still obligated to that $8,000 offer. But if you turn down the $8,000, if you countered at $9,000 and he said no then he is out and he can walk away ethically and morally. He can walk away from the table. So you have to structure your deals. You have to word your sentences correctly.
Michael: If I was making that offer for $8,000 and you came back and said to me it’s a good offer but can you up it to $8,500 or $9,000 I could actually put a clause in that says my offer for $8,000 is good for 24 hours.
Toby: Absolutely. People do it all the time.
Michael: That makes sense. So the domain names that I see on your list would you say that most sellers have flexible pricing? If I see a domain name for $10,000 how do I know it is firm or how do I know that there is some percentage of flexibility in there.
Toby: It varies from seller to seller but I think across the board the general rule is most of them are. Like we talked about earlier with cars and with domains the domain is worth what somebody will pay. Whereas with cars it is completely different. It has a book value, it is worth what it is worth. So yes I think so. I just get a lot of offers. Some offers are ridiculous. Like I would pay three times what some of the offers are. But some people come in with very reasonable offers. If you make an $8,000 offer on a $10,000 name we are talking. That is a serious very reasonable offer.
Michael: And do you have to get on the phone with any potential buyers to try and close a deal? Or do you do everything by email?
Toby: Typically I do it by email. But I always offer to get on the phone with anybody. I’ll normally say it somewhere in the email I am always available on the phone for any questions. But doing deals via email is something that I enjoy and I like it. I’ve been doing it even when I was back doing the car thing I was in internet sales. So I’ve been selling on the internet for so long via email on all the different sites (EBay and all that kind of stuff). So I like the email chain. There were so many times that I have sold names to people and I have never talked to them one time. I’ve sold names well into the six figures, multiple names to specific buyers in the six figures and seven figures and never talked to them. I think it is amazing. I think it is fantastic. When you get on the phone, the phone is like a sponge. It will absorb so much of your time and it takes away from the bulk of the business that I have to do which is a lot of emails and things of that nature. So I am not a big phone guy but if I have to get on the phone absolutely. I’m all for it.
Michael: And speaking of the phone being a sponge, this interview has just passed an hour so I’m going to try and hit a few more points here Toby. So let’s talk about end users. Do you ever get a domain name and then approach end users, a company, an individual that owns the .net version, any type of end users to try and sell one of the domain names that you are brokering?
Toby: You know what, I do and I’m glad you asked this question. It’s one thing that people ask me a lot. How does the sales process work? Do I contact end users? And since I am kind of on my own with just a few employees I haven’t had the time because there is a real process to reaching out to end users. To compile all the different email addresses and phone numbers and all that kind of stuff. But anyway to make a long story short last week another broker basically emails every single name that is accepted to my newsletter. He emails end users. He researches it in his own way which a lot of people know Google is your best friend. And he will email end users and basically let them know that the name is for sale. Since he started nine days ago I’ve sold four names to end users already. Just through him. Now my subscriber base already consists of end users. But for him to bring that many deals to the table in that short of time is nothing but amazing.
And there is a couple of schools of thought here. The end users that are buying the names are getting a fantastic deal. I try and put aggressive prices in my newsletter so for an end user to get that kind of price is a great deal for them. Are we leaving money on the table? Maybe, maybe not. Now it is tough to say. The key is it’s so difficult to get an end user to the table. You have to get all the planets to line up and everything just has to be perfect. You have to find the right end user that can use this exact domain and has to understand the value of a domain and he has to have the money. It is no easy task. So for my guy to have brought this much to the table is fantastic and we are definitely implementing it to be a regular thing. So now it is kind of a new feature if you will. And this is the first place that I am talking about it. Every single name that is on my newsletter does now officially get marketed to end users and we are already seeing results. So that is fantastic.
Michael: That is fantastic. Alright Toby I want to ask you about something that might still be a little bit of a sore subject for you. A couple of weeks ago you announced on your newsletter that you received inquires for buying access to your domain name email newsletter the night before it comes out so somebody can get a jump on some of the domain names that are listed. Look in there. See if there are any gems that are maybe underpriced and snatch them up before the 16,000 on the distribution get access to it. For someone interested it seems like a great way to gain access and you make a little bit of additional revenue by selling premium access. Then the next day on the newsletter you sent out a retraction for the offering. And actually apologized. What happened?
Toby: First of all it wasn’t the next day on the newsletter. It was three hours later. The truth of it is I think it was an interesting idea but it was very, very poor execution. A lot of companies out there, in our industry and outside of our industry, have different levels of membership. Premium, platinum, gold, titanium, you name it, whatever they want to call it. They charge for the luxury of being an exclusive member. You get exclusive member benefits. So that was my logic behind the whole thing. Plus I can throw $50,000 in the bank as well. I don’t know about any of your listeners or yourself but I am always figuring out ways to fill up the bank account. And so I thought it was a great idea, once I threw it out there a lot of people said yes right away but then all of a sudden it was a bombardment of really bad emails.
I was like “Oh Gosh what have I done?” And it is not a sore subject with me. I just tried something and it blew up in my face. The reality is I was a big boy about it. I apologized and I pulled the plug on it immediately. And that got me a lot of respect which a lot of people already respect the ethical and moral way we do business with my company. And that I have always done business. It made a lot of people feel bad. It made them think that they were going to get a newsletter that had already been combed through by the big top 50 people in the industry. And I couldn’t say…I had no comeback. But I did say when you are right you are right. I pulled the plug on the whole deal immediately and I have yet to show anybody my list early. And I read somewhere that somebody said, I can’t remember who it was or where it was at, but it basically said I would imagine Toby probably shows his newsletters to people early anyway. The truth is I don’t. Not one person period sees my email early. And so I’m still not opposed to doing some type of a membership thing in the future but instead of making it $1,000 to 50 people I make it $49.99 to everybody. And maybe it includes some different perks. I mean I don’t know.
I’m always looking for the next version of the newsletter business. Newsletter.O. And just like building that back end program to follow up with customers, building that back end system for people to come into my site. Doing different type of tier memberships. I’m looking for the next version. If you stay stagnate you are stagnate.
Michael: So as long as we are licking wounds here and looking back on past mistakes what do you consider your biggest failure in domaining so far and what did you learn from that situation?
Toby: My biggest failure in domaining.
Michael: Maybe a negotiation that you had that went sour.
Toby: Well I’ve had some negotiations where I know I left a bunch of money on the table with a couple personal names, but I can’t say what they are. One time I know I sold a name and in about two weeks later it went by and I saw that it had sold for $150,000 more. So that was heart wrenching because that was a personal name. I would say that if there was anything where I just kind of made a big mistake and then just pulled the plug was what we just talked about. That was the first thing that stands out. Probably because it was the most recent. But you know what?
Oddly enough the thing is there is no such thing as bad publicity. I had two people, just two people unsubscribe to my newsletter which typically I don’t want to have any. I get maybe one person a month that unsubscribes. My retention rate is amazing. But once I did the retraction those two people re-signed up and I got about 60 or 70 new subscribers and I got an ocean of submissions out of the deal. Go figure man. Was it a mistake? I don’t know. Maybe I just needed to gut check myself.
Michael: Oh I needed to come back to the $50,000 watch question that we discussed at the very beginning of the interview Toby. You said that you could size up people coming into your showroom where you sold Lamborghinis, Bentleys, Ferraris by the shoes on their feet and the watch on their wrist. If they walked in with a $50,000 watch on their wrist you knew they were a player. That they could actually have the money to spend on a car like this. Can you size up a domain name buyer in the same fashion?
Toby: You know you can. It takes research. If you have somebody reach out to you to buy a domain that is in your portfolio, if they do to me the first thing I do is hammer down to find out who that person is. I don’t want to under price it if it is somebody who I feel will pay an astronomical amount for example. So take their email address, put it in quotation marks, slap it in Google and see what happens. Hopefully something will come up there. If it is a Gmail address or Hotmail or something like that that means they are trying to remain anonymous and typically they can. But basically do as much research as you can humanly possibly do to find out who you are talking to. And once you know if you are dealing with somebody that is in that industry, that specific industry that that domain name is revolving around, you know you have somebody real on your hands.
The second thing I would say to that, maybe not necessarily as prequalifying but always try to get people to make you an offer first. If somebody contacts you on your domain name don’t tell them you want $5,000 for it. Make them step up to the plate and make you an offer. Chances are they will pay more than you will sell it for.
Michael: Good advice. If you have a follow up question for Toby please post it in the comments below. We will ask Toby to come back and answer as many of them as he can. If people want to follow you, your activities, your sales can they do that on Twitter Toby?
Toby: They can do it on Twitter also anybody that wants to can go to tobyclements.com and sign up for my newsletter. There is a link there. You sign up for it. You get an email where you double opt in. I welcome anybody to do it that is thinking about getting into domains. That is definitely a way to get a regular daily email that shows you what names are selling for and things of that nature. And by all means my email is email@example.com. If you want to shoot me a question or a comment I’d be happy to hear from you.
Michael: I get Toby’s newsletter. I enjoy it. Toby, thank you for taking the time to come on today’s show.
Toby: Michael thank you so much.
Michael: Thank you all for watching. We will see you next time.
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