TechCrunch.com covers the sale of the domain, and launch of the site Candy.com, this morning.
So first let me congratulate Rick getting this deal done and retaining a piece of the new business.
Now to the article and the comments.
The stupidest comment in the article itself by far is:
“The $3 million question for them: how quickly, if at all, will they make up for the price it paid”
Would TechCrunch ask that on reporting an investment in a start-up.
In another post from today, TechCrunch in announcing that MOBshop a start up just acquired $2.5 million in its initial round of financing, it did not ask, how long would it take until the investors get their money back. Nor did it ask how long would it take for the investors in the start-up “clickthrough”, which got $1m in funding, to get their money back.
Nor would TechCrunch, in announcing the acquisition of a company, ask how long would it take for the buyer to recoup its investment nor did it question Microsoft how long would it take to make back the $100 Million it is reportedly is spending to market Bing.com
Candy.com is a investment.
An acquisition in perpetuity.
You know what $3 million dollars gets you in a CD today, $60K. How long will it take you to make another $3 Million at $60K a year, 50 years.
But you say you always have the $3 Million in the CD, its not going anywhere.
Well neither is the value of the domain.
Its not going anywhere but up.
The comment place by “Fishing In New England” illustrates to this:
Is this the sign of a returning bubble? Or just someone who really likes candy.
Looking at some other purchases, totaling over $8M –
Well Fishing those sales aren’t recent by domain standards they are over a year old, in some cases a few years old.
So if those 4 sales total $8M, let’s look at some truly recent sales, like from this year:
Toys.com $5.1 M
So in the worst economic time in the last 70 years the top 4 sales this year, increased by 40%.
Domains are a pretty impressive investment if you ask me.
The stupidest comment on TechCrunch (of course its early in the day) however goes to 10things.me:
“I don’t buy it. it doesn’t make sense. the buyout of the domain for $3M smells like money laundering for (to) me.”
Of course you can expect to much understanding of the value of domains from someone who would go out and register 10things.me and then actually use the domain, like its the best one he has.
The best comment of the day belongs to Anthony Mitchell who obviously “gets it”
“””For that price, they could have bought a handful of television ads that would quickly be forgotten. Or print ads that would likewise disappear into obscurity. Instead some savvy candy company has etched itself into the minds of global consumers by acquiring a brand that nobody can ever forget.
The best values in online brands are found in the short, category-defining generics.
We could make a list of branding failures. They would include the Dallas Cowboys ‘returning’ their recent purchase of Cowboys.com. And Starbucks letting Coffee.com go to a competitor.
As commerce shifts online, high value domains will gain in value as investments. The uninformed wailing about Candy.com’s purchase price can be traced to people who lacked the foresight to invest in online brands at an early enough stage.
Consumers aren’t fooled. And neither am I.”””
Rick give a ticket to TRAFFIC to that guy.
Excellent analysis Michael, you usually read idiotic comments on Tech Crunch when it comes to domains. 10things.me should get an award for most ridiculous comment of the week, obviously someone with no business sense and probably no money. If you do not understand the purchase and value of a name like Candy.com then you are really just someone with no forward thinking or clue about the Internet. Again IMO
This is a common angle for the folks who are on tech crunch, often they are looking for the one out of thousand+ businesses that could become a facebook/twitter, and overlook the simple business that actually can make money without turning to vc cash…
You cant fault the domain name if the company does not succeed, the 3 million investment with the right biz model and follow thru is simply frontloading a big portion of your advertising expense..who knows if they will succeed, but there are a lot of ways to climb to the top of a mountain.
M. Menius says
“The uninformed wailing … can be traced to people who lacked the foresight to invest”
You just summed it up. Too much envy and/or ignorance in the world. Glad TechCrunch covered a domain sale.
While I wish everybody would “get it”, at the same time we also have a lot of opportunities these days because of those that don’t “get it”. Their loss is our gain. Too bad for them.
Javier Zaffaroni says
It’s amazing how a lot of people still don’t understand what a great domain means for a business. But as JP says, let them be ignorant for a while… 😉
Seems to me they will get $3,000,000 in free advertising from stories like this.
owen frager says
Why did 1-800-flowers pay $85 million for Fannie May confections if there is no market to sell Candy online?
Robin Wauters says
You’re stretching, trying to make it look like I have no notion of the domain industry. Trust me, I do. It’s not a dumb question to ask how quickly Candy.com will make up for the price it paid for the domain name, which I think was a fair one for a great .com. Which is no guarantee for success, which is my point.
“Would TechCrunch ask that on reporting an investment in a start-up”? Errr, yes. It’s what keeps us busy.
I checked out several of your recent stories on startups, (when I say you, I mean TechCrunch, not that you wrote the other stories) the 2 I mentioned in my post for example and I did not see the question asked “How long will it take to get their investment back”.
Of course a startup is a whole different ballgames, the venture is successful or the money is lost.
In this case, even if the online site doesn’t work, such as in the case of Toys.com which went into bankruptcy, the domain still is worth more than this company paid all day.
Robin Wauters says
We grill VC-backed startups for performance much more than we ask ourselves how good domain name / e-commerce sites are doing. And saying a startup is either successful or the investors lose their money is equally generalizing, there are more options than that. And finally, it’s not because you say domain name will be worth a lot of money for decades to come that this will prove to be the case.
I’m sure it wasn’t your primary intention, but attacking me for the post I wrote on Candy.com was uncalled for, especially since it was the commenting that frustrated you in the first place and not the article.
Rick Schwartz says
Again, thanks for the article and the fact that TechCrunch.com is following the candy.com story when few others in the media are to any great extent, deserves some props.
It is a legitimate question about Candy.com returning the investment. That is a legit debate and only time will tell who will win that one or if it will be a draw.
I think the big disconnect is folks not understanding the other points that add value. In this case it is the Melville Candy Company that was already a going concern for some 38 years, but until buying candy.com, nobody that I know ever heard of them.
I think it is the outright dismissal by so many of the techie sector without taking the time to examine the domain way below the surface. Some of these guys build a site and never update them. Never improve them. Where I come from the site gets updated and evolves daily. It is always a work in progress. Always making it better. So when I see these guys comments judging anything on the first day to make their point without regard for that it kind of proves their mindset and my point. They make a site and they think it is hardened in cement. Candy.com could flop a dozen times and can be reinvented each time looking for the winning combo. Eventually it will get there imo.
So again I thank you for giving everyone the opportunity to sway and change some minds.
stephen douglas says
Check out my post on Techcrunch I wrote before I read your article here.
I think a lot of the “disbelievers” on Techcrunch who commented on the “high price” of the domain CANDY.COM just don’t understand the panoramic range of investment value a generic domain presents. It’s not about “how many jellybeans does this company need to sell to get their ROI.” That is the raw uneducated question that would be asked by someone who doesn’t understand domain values.
This is why hiring a domain consultant is an important part of every major company wishing to get a “leg up” on their competition. There some great consultants in this sector, including yourself, Elliot Silver, Adam Strong, Frank Michlick, Rob Sequin, Jamie Zoch, Sean Stafford, myself, and Andrew “Dub-A” Allemann, just to name a few. Paying a domain consultant $100+ an hour for their expertise on advising domain values is the best expense any company could justify in their ad budget for online marketing.
Tooting my own horn, (which if I didn’t, nobody would believe this post was from me): I was the first one to promote the UNDENIABLE fact that the same amount of money paid for a even a small traditional marketing/ad campaign is lost forever after just a few weeks. You better hope your $50k ad campaign worked, you got your demographics interested, and you brought in and converted a lot of visitors into “loyal” customers on that $50,000 ad campaign, because within six weeks, that $50k is history. It’s GONE.
However, if you had spent that same $50,000 on a generic descriptive domain name that nicely captures your product/service, you just invested in a “marketing tool” that works for you nonstop, and the more you promote it, the more that domain grows in value. Not counting at least four other major marketing assets in a domain I won’t list here, the basic ROI is that you have an “appreciable marketing asset” in a great generic domain name. Very few domain buyers have had to sell their domains for less than what they paid for them.
Best investment move? Spend your ad money on buying a domain name that describes you and your COMPETITORS’ products and services. Then blow your competitors’ minds by only spending $10 a year to continue that “Own your Competition™” blitzkrieg they are now realizing you’ve just launched. There is nothing that any competing company can do to combat an online juggernaut that is a generic descriptive domain name owned by their competitor. YOU need to be the company that OWNS the generic descriptive domain name of your prodservs.
That, my marketing director friends, is the reality of owning, controlling and commanding a generic descriptive domain name that represents the “recognition” phrases/words of your competitors. LOL. It’s such an easy offensive strike for a company, but so hard to find a marketing general who understands these basic domain strategies. I would have thought most marketing directors and businesspeople would have read Sun Tzu’s “ART OF WAR” and figured it out.
Heck, take most words that describe ‘common’ words and products, and you will notice that the top corporations already own them: “toothpaste.com” “shoes.com” “book.com”, “razorblade.com”. “weightloss.com” “soap.com’ and tens of thousands of other words and phrases.
Every time your competitors mention their product/service (prodservs) in their advertising and marketing generically, they will be mentioning YOUR DOMAIN NAME, hopefully pointed to your website. You own “solarchairs.com”, which you make or distribute or retail. Anyone else doing the same will have to find some other way to describe “solar chairs’, because if they mention “solar chairs” in their advertising, they’ll be selling your generic descriptive domain name “solarchairs.com” or whatever extension you own that domain name.
I’m glad you covered Tech Crunch’s limpid attempt to report a very serious domain name sale that will be watched closely for the next few years. It’s an opportunity for us domainers to explain to the noobs why they can spend lots and lots of money working on SEO development but be in denial that a great domain name can literally return benefits, assets, and value for less money spent on any other conventional means.
Chris Desouza says
10 years from now, the acquisition prices of these valuables will seem like a joke.
TechCrunch is so out of the loop, considering Mike was in the business not so long ago.
john andrews says
GREAT to see discussion involving the tech crowd AND the domain crowd (with some marketing mixed in). The sooner these communities get together the sooner we can move forward.
By the way, any chance we’ll see a candy bar called “TechCrunch” in the future? I think it might work…. 😉
The TechCrunch bar, sounds tasty