When thousands of people worldwide are after the same domain, it comes down to the highest bidder. You don’t want to overspend, but also don’t want to be outbid. What are the best practices to purchase domains? Are you willing to join the bidding war for your desired domain? Listen to the full session above to learn how to invest in domains!
Million Dollar Domains EP06
[00:00:00] Welcome everybody to million dollar domains. We have a great show today. A great talk here on clubhouse. It’s great timing that over the last two weeks, a million dollar domain names, we’ve talked about parcelization or owning fractional interest in domain names. And what might that look like and what would it look like for a buyer and what would it look like for a seller?
And now we can get some real world, a real world looked at it as we had our first, the industries. I’m going to say first, because there was some efforts to do it back in like 2014 or 2015 with an offshore company operating out of Billy’s or something like that. But I’m going to say on a wide scale, this was the first one Andrew Roser as responsible for it and his team along with JT and media.
And so we’re going to talk about that [00:01:00] about 10 minutes into the show, but I wanted to just congratulate them and welcome everybody to million-dollar domains. I’m going to ask a few people to come in. If anyone has any questions, as everyone’s taking their seats feel free to raise your hand as a speaker.
And it always helps to get the ball rolling with a couple of questions. I’ll also go over some recent activity in the million dollar domain space. We continue to get transactions daily. Okay. Weekly, if not daily will we continue to get examples of unreported transactions and names changing who is servers, which is usually an indication of a transaction as it’s changing an older changing a registrar, moving to a corporate registrar where it’s most likely owned by a corporate owner, as opposed to [00:02:00] maybe someone who’s seen where the same registrar has owned it for 17 years or something like that.
There’s a lot of indications we have about activity in this space that may not come with price, but certainly indicate activity. Domain names move when deals are done and deals are usually done at a market value. And I think rather than, wondering what the market value is, I think we can get an idea of where both sides probably would have been.
And that’s in many cases, even though we don’t have a specific reported price, I think we have an idea of it probably would have taken this to get the name away from the seller. So the buyer must have paid about this or that.
Let me invite a few more people in, for those of you listening on the podcast, a million dollar domains as a talk that’s done in clubhouse in domain club, we do million dollar domains [00:03:00] every Wednesday at 1:00 PM. And then we we put the recordings up on domain club and start-up club, and we should have a lot of the past shows up by Monday, I think including the pre the two shows previous to this one, talking about parcelization of domain names.
And then we also have recording. We’ll have recordings of our Monday show. You can also listen the replays. You may be listening to this replay on clubhouse where you may have come onto clubhouse and they may have recommended this talk because of its popularity. And you may be listening to a replay or you could be listening under a news feature.
Clubhouse has called listen. I think that’s what they call it. Where without downloading the app, you can listen to different talks, almost like they’re a podcast. So if you’re listening to million dollar domains today, welcome whether it’s here in LA. Picture, live in front of a studio audience is when the talk happens, lie the [00:04:00] clubhouse.
And I think it’s worth being here. And so I appreciate those of you who come each week for the past 10 months. And the welcome. My name is Pedro pal. I’ve invested in the domain space for about 23 years. I have sold two domains for over a million dollars, but I’ve consulted on other ones. I’ve not yet brokered a domain name over a million dollars.
So that’s something I hope to do this year. And I think when I called the room million dollar domain names, and you can get more information that billion dollar domain names.com. The idea is to separate the discussions from maybe buying your first domain name, buying a domain name, where you just need something functional for your business, and you do like to spend some money and buy something nice.
But I think what we’re talking about here are names for companies and startups, where it’s going to be your brand is going to be your identity. You want to set yourself apart. It’s a crowded world out there. Whether you’re [00:05:00] advertising on television or media or trying to gain traction in an industry, One of the things you’re trying to achieve is notoriety and a platform to be able to tell your story.
And we all like to think that the best stories were the best people and the best teams will always win. But how do you get the attraction? How do you get the notice? Sometimes it can be simply from your company’s name and to the extent that you can follow that up with owning a short one word.com you’re announcing to people that you’re a player you’re in this space.
Your company is here for the long run. You’ve done the things that successful companies have done by owning a short one word or two word, domain name. Secondly, as investors. I think domain names are unlike any other assets. And we use comparisons with other domain names to describe them. [00:06:00] But I don’t think that means that domain names are like, and the other assets domain names are a unique combination of, I see each domain name is singularly unique.
If I own page house.com, there is not another page. how.com out there. I own page out.com and if anyone types, page, house.com into the internet globally, except for some countries who control their own internet they’re going to go and they’re going to get, what’s called a resource locator.
They’re going to get content about my whatever’s on page, how.com from me. And I control that exclusively. And I have the exclusive right to control. As long as I keep renewing the domain name. The content, the links, the resources available on page, how.com. So it’s a singularly unique asset. I think it’s both a [00:07:00] brand and it has functional value.
Most important thing. We’ve discovered about domain names and maybe rediscovered. The last two years has been when you own your domain name, you can own a direct connection to everyone of your customers, vendors, and partners, without paying any intermediary. If you want to create a product that you want to sell directly to customers, you can do it from your website and not have to pay anyone else.
If you’re spending the money to advertise your product, and you don’t want to go through a distribution channel, that takes part of your profit, you can sell directly on your website. If you want to gather your community and not have them be shown competing ads like on Facebook or other social media platforms to not have your company be harvested by Twitter or Instagram, [00:08:00] to not have the data of your customers being manipulated by social networks, with your website, whether you pay $8 or $8 million, you control the interactions you have with your customers, and you can sell products, services, tickets, experiences, or whatever you want on your website.
And the other thing is you can interact with the rest of the internet where you’re placing links to your products and services. You’re placing data, you’re placing images, you’re placing things all over the place. And you’re not having to download a separate app to do that. If you have a URL that you control, you can put a link to any content on your website, on anyone else’s website.
And I think there’s value there that’s functional. And then there’s collectible value of domain names. One letter, two letter three, [00:09:00] letter, four, number single words. You could own something that’s no one else sells and yours might be better. And you can just own the best, whether you own the best, just because you want to be known as someone who owns the best or whether you want to sell it to someone else.
You’ve got this collectible value in domain names. So we’re talking about million dollar domain names. We’re talking about. Short easy to remember in demand the type of domain names, or there might be thousands, if not millions of people that would like to own these special domain names. And so the way we transact businesses, whoever pays the highest price, gets the name.
And if you want to get the name from somebody, you’re going to have to pay a multiple of what they paid for the name or what they think the name’s worth to pry it out of their hands. So that’s the million dollar domains. I wanted to start today and we are going to get to the securities. I’m sorry, the the parcelization of a domain name on rally road.
And because I’m [00:10:00] going to talk about rally. And the fractionalization of a domain name. I just want to give a quick disclaimer, I did buy shares of directions.com on rally road as an individual, nothing I’m going to say today should be seen as representing investment advice. Nothing should be seen today where I’m categorizing the shares that rally road sales, the virtual shares as a security.
This was not an advertisement. This is not a publicly reviewed piece of data about the offering. And the reason I say that is the space that we’re in. When it comes to securities regulation about these type of jointly owned assets is very complex and I commend media options and Andrew and JT for having the courage over the last four years.
To do this offering. And so I want to make sure that nothing I do talking about it ever messes up what’s happening. So it is [00:11:00] a private offering to a select amount of investors on a platform rally road that qualifies you before you’re allowed to buy it. But to the extent that it says a lot about, parcelization and fractionalization of domain names, I wanted to talk about it.
So there’s my disclaimer. Let’s see. Welcome again. And before we get to the rally road, let’s just review what happened this week in the million dollar space. If you’re not following Elliott Silver’s blog. You should he’s doing a good job with his embrace.com where he lists the names that are selling for, one word domain names that he follows.
But I think the other place that I get a lot of information is the other blogs. Robbie’s blog reported the domain name, galaxy.com. It was owned by Beijing galaxy world group. Let’s see, and there was a tweet from V named saying, galaxy that con was closed for [00:12:00] seven figures. Now the name used to be priced for 7 million. So even though we don’t know the transaction price, we know that someone either paid a discount to 5 million, or maybe they had to offer cash above 5 million.
So we don’t know this specific thing, but but when there is a, who is update, I think Robbie will report it. So galaxy.com and I think this is perfectly indicative of the most popular section of domain names and the million dollar space right now, which is a word. That may not be used for the literal meaning of the word, but can be used to brand almost any company or idea with the word that’s known to potentially 90 to 95, to a hundred percent of their potential customers.
When you say galaxy.com. That’s people are going to remember it. They know the word galaxy they’ve used the word galaxy. One of the ways I look at million dollar name sometime [00:13:00] is at what grade level does a certain percentage of the world learn? A word, is it a pre-K word, a first grade word, a third grade word, a fifth grade word.
Galaxy is an early primary word that people have known for most of their lives. And I think when you think of whether it will be applied to a crypto site, a gaming site, even a space travel site, if you want it to be literal, I think this is the type of name that has a huge number of uses, but there will only be one galaxy.com.
And even though there’s a lot of companies that are maybe galaxy trading or galaxy limited, or I was thinking about names. When it comes to great domain name, sometimes you can think about movies where they would have a company like a CIA front where a secret agent or something, and it would be like galaxy exports, just the most generic word you could think of.
And I think galaxy fits into that. So we had a transition action potentially [00:14:00] in and around $5 million for galaxy.com. James Isles talked about the buyer of world-class in August Braden collar revealed that he had sold world-class for 400,000. And I think he had purchased it, for a little bit less than that.
And he disclosed that on different blogs. It had laid dormant, but now we have a new website for world-class dot com. They world-class aims to discover and share hidden treasures around the world. Those treasures come in the form of foods discovered while traveling the globe. So you’ve got a company who wants to do million dollars of business online, and they’re going to be able to, in essence, take all the value that’s ever accumulated under the name.
World-class. World-class this a, world-class this a world-class this, and they’re going to be able to apply it to all the goods and services they sell. And if you think about it, if they want to do 10 to [00:15:00] $50 million a year, what percentage, how, what small percentage are they going to be more effective because of their easy to remember name world-class dot com, as opposed to maybe being world-class with or world-class limited, or world-class trading, which are still good names, and you can start and be successful as a startup with a longer name.
But I think here we have an example of a company actually paid. $400,000 to be world-class dot com. So when you’re out there thinking I don’t want to pay 400,000 for a domain name. I don’t want to pay a million. I don’t want to pay 2 million. That’s true that you don’t want to, but I don’t think you can go as far as saying they’re not worth it because every day, just in these two examples, we have a two word name going for 400,000 and a one word name, potentially being in a [00:16:00] price range, near 5 million.
So that’s happening. That’s written in stone. Those things are happening. That’s what it takes to get a transaction done for a high quality domain name. And I think if you’re trying to buy a high quality domain name at a discount, you might be able to, and I don’t want to discourage you from being as savvy and smart as you can, when you inquire a domain name.
And if you have the ability to buy a number of different domain names, then yeah. Find the one you can get the best deal. But if you’re trying to get the ultimate name for your company or the ultimate name for your business, and you keep trying to pay a little bit less than market, there’s a chance. That the market’s going to keep going up and you’re always going to be paying a little less, and you’re always going to look back and say, we could have bought it in the beginning of 2022 for this.
We could have bought it in the beginning of 20 or middle of 2021 for this man. We [00:17:00] could have bought it in 2019 for this. And I think once you get the domain name, when it’s working for you, even if you end up overpaying by 25 to 50%, you’re still because of the discount that most domain names sell to from the ultimate value.
You’re still going to look back on that purchase price and be happy with it. So I think we have consistent additional sales of million-dollar domain names, multimillion dollar domain names, and we’re starting to see two word names, approach a million dollars. And I think that’ll be a theme throughout 2022.
So thanks everybody. I want to get into the main topic today. I appreciate everybody coming in to million dollar domains and we’ve been talking the last two weeks about partial visitation or selling shares and a domain name. And up until now, it’s mostly been informal partnerships of multiple people saying let’s get together and buy them.
[00:18:00] Or I dare say that many times it’s been competing bidders that rather than running the price up against each other, with domain name, they may be decided to mutually on the name and own half of something that a better value. I think there’s been times when informally groups have got together when a name’s available at a public auction and I’m in one of these groups and you end up forming an LLC and you end up having some, some rough parameters and you try to legalize it a little bit.
Mostly that means forming an LLC and having a member agreement that dictates what you do. And even though if you do own a share of a domain name, you might be able to call up somebody and say, Hey, I own a 25% share this name and I’m trying to buy something else. You want to buy my share in that name.
And somebody might look at it and go I do, who was the other partners? And who’s keeping the books and the records and, is it, am I really gonna have legal title to it? And [00:19:00] it’s been a little messy up until today. So I think the promise of being able to have a shared ownership, a domain names has been around for a while.
I probably remember when I was on domain trip or with Andrew Roessner that we probably talked about it three or four times back in 20 15, 20 16, 20 17. But I think he was. Got serious about 2017 and said he wanted to do it. And I’ve been waiting because I wanted to see what he did first, I’ll be doing something this year, but I wanted to give him a chance because I want you to hear me say that doing the first one was incredible.
And I think the fact that they’ve done the first one on rally road, they’ve had to convince rally road. That domain names are real assets. It’s my perception that they probably did. They probably had to convince rally road as well as maybe some rally road investors that a domain name is worth putting on the platform.
[00:20:00] They’ve had to find the right domain name. They’ve had to map some seller goals with putting the name out in this method. And then they’ve had to navigate a regulatory structure that, that doesn’t really exist. You can’t just go to the government and say, I’d like to do a shared ownership of a domain name.
How do I do it? You have to do is you have to figure out what to do, and then you have to look and see. Here’s the hard rail of being a securities offering, where if you offer a security in the U S you have to provide information, disclosure, information documents, updated financials in a way that the public is protected, because just the idea of someone standing on the street corner.
In New York in 1873 and saying, Hey, you want to buy some shares of this railroad. We’ve learned that it’s right for abuse. And so we have protections in place, but that also means it’s tougher to go public, to put together a [00:21:00] public company. So there’s always been this area called a reg D or accredited investor or exempt offerings where you can have multiple people buy something.
And if you abide by certain rules, you cannot be considered a publicly traded security, and you’re not going to provide the type of reporting and disclosure. And I think they’ve had to navigate that and they’ve had to navigate it as a seller, whoever was contributing the asset and their marketing plans, as well as working with the platform.
So I commend them and Teddy Roosevelt once said, it’s easy for the critic to sit on the sidelines, but it’s the man in the arena. Who does the work. And I think in this case, media options and Andrew and JT together, they were the man in the arena doing this. So I really commend them for getting this project out, the name that they sold shares.
And then I’m going to say shares because rally road calls them something like shares, but they’re [00:22:00] not securities. And again I want to be careful to say nothing. I say about directions.com today is meant to intimate that it is a security, a publicly traded security. You don’t have the same rights and protections that you might, your investment is not guaranteed by the government.
The money you send a rally road is not insured like it is with a stock brokerage firm. There’s a lot of things you don’t have. And so I don’t want people to assume they have those protections and even the offer or the issuer of a security or the sponsor of a reg D partnership, a private office. Has things where they can’t do publicity, they can’t do promotion.
So I am not affiliated with the owner of the asset with media options or with rally road. So I am just a commentator and in million dollar domains, we talked about million dollar domains and we’ve been talking the last two weeks about fractionalization and securitization. So I [00:23:00] want to be able to to bring this world where life.
So here’s what happened on Friday, actually Thursday afternoon. I’m sorry. Friday morning, about 4:00 AM. I woke up and. I saw trying to see if it was an email. I think it was the domaining.com post that said directions.com is going to come up for sale. I think that was on Thursday and I went and I opened up a rally road account and I qualified myself as an accredited investor.
And I think it’s important to notice is this fractional ownership, investment is being offered to accredited investors with certain income and net worth limits. So when you click that, you want to buy shares. The first question they ask you is we need to qualify that you’re an accredited investor. And the reason is if you get back to this regulatory structure in private partnerships among sophisticated wealthy investors, there’s a sense that.
[00:24:00] You’ve accumulated enough wealth where this isn’t all your money that you’re putting into an investment you’ve accumulated wealth. And that signifies that you’re probably able to withstand and understand the complications of what’s being offered to you without the protections that would be offered to the general public.
And I think at the core, it’s really important to understand that with rally road, whether you’ve been with them for the last four years and bought Michael Jordan shoes, a copy of the constitution, a Lotus sports car, a baseball card, or one of the aches that they’re selling right now, the NFTs that which you’re entering into is a limited liability company.
That’s formed for the specific purpose of holding the asset. And most of what rally road is doing is focused around offering people the chance to participate in the rise in value [00:25:00] of underlying assets. Really don’t even talk about what would happen if something fell in value. So what happens is rally road takes ownership of an asset, a baseball card, a car, a declaration of independence, an NFT, or in this case, a domain name.
And then you buy a share in rally road, but you’re buying a specific share that allows you to participate in the upside value of only this specific asset that you’re interested in. So your. Interest in directions.com that I bought on Friday. I don’t own part of directions.com per se. I own a document that says I get to participate in the upside value [00:26:00] of owning directions.com and that’ll be run through rally road.
So those are the details. Those are ugly. It’s not as fun as saying, Hey, you can buy shares and rally road. But I think because we set the table over the last two, two weeks talking about securitization and fractionalization, it’s important to accurately define what it is that you own. And the thing about rally road is they were started about four years ago.
Crypto was here, Bitcoin was here and FTS were here, but very known by just a fraction of even the crypto community. So in the last four years, there’s been a lot of innovation in NFTs and crypto and tokens and swaps and staking and all that stuff. And rally road is really not part of that as much as they were formed four years ago.
And they found this ability to do crowd [00:27:00] ownership through the existing, rules that were in place at the time. So that’s what you’re owning. And as I’ve shared with you over the last couple weeks, The greatest revolution that’s allowed, shared ownership in my opinion has been DocuSign and electronic signature because it used to be, you’d have to actually have physical documents.
You’d have to, you’d have to have, in this case, 2,500 people all sign a copy of the same membership operating agreement for an LLC, and that all those copies would have to be accumulated together in physical form and presented as. In essence operating agreement for that LLC. And now digitally, you can sign and you can agree to everything.
And if they ever needed to produce all the membership interest of the LLC that owned this asset, whether it be a baseball card or a car or something like that, [00:28:00] I think that that they could, they could just print it out. So it’s important to remember is rally road is a centralized platform.
They’re not part of the DFI trend. They’re not part of the blockchain trend. And I think that’s good because first you want to make sure. Your ownership of your asset is secure, that they own the domain name and that, you own part of the domain name. Some people now would say they’d rather be on the blockchain.
And I understand that, but rally road is a pre blockchain company. So even though we have a lot of new stuff coming on board and you’ll see some of it, and what I offer later in the year, this is still simply an expedited way with a great looking wrapper of buying with our limited liability corporation interest.
So the good news is you can buy part of directions.com and here’s one of the found, [00:29:00] so you can clip it if you want, and you can repost it, or I’ll probably put it in the summary. I believe a fractional share of a domain name paid high. Then, if someone owned the complete domain name, because I believe domain names are e-liquid assets.
So if I own all of directions.com, I own it all. I can operate it and I’m trying to sell it to the best end user. But until then, it’s non-liquid for me to get any money out of owning directions.com. I would have to sell the entire domain name, directions.com, which would limit my buyer to someone that could afford to pay 150,000 to a million and a half dollars for the domain name.
And that’s what I think personally, the value of directions.com might be as somewhere between a hundred thousand [00:30:00] and a million and a half a million. But the only way for me to get any money out of it, it’d be to sell the whole name, which is a complicated transaction that requires one person to love the domain enough to pay even a wholesale price and the hundreds of thousands, much less a retail price of billions, but a fractional share a partial share ownership in a limited liability company share of rally road that participates in the upside of owning directions.com that trades at $10.
So how many people can afford to pay $10 if they’re an accredited investor to own part of the upside and downside of directions.com, a huge number of people, and you say pays, but that should matter in valuation, but it does because I’m more likely to spend money and pay a higher [00:31:00] valuation. If I know I can get.
Much easier than selling the whole domain name. So you might say page directions.com. Are you saying that maybe it’s worth a hundred thousand to 200,000 wholesale, but it could trade higher than that. And I think it might, because if people only have to pay 10, 20 or $30 a share or $5 a share, it could go down, there’s going to be more activity.
And those people that are training it know that they can trade out of it. And they can maybe even if the value goes down, takes an acceptable loss, but they can do it. They can get their money in, they can get their money out quickly. Now it’s not that quick with rally road, it’s a daily bid-ask spread, but I do believe that shares of an e-liquid asset that are liquid.
Even though the shares on rally road are liquid, [00:32:00] that would make them a security, but there is some ability to trade out of them. I think that you could have that asset trade at higher than wholesale values. That’s the good news. The bad news is I think that there’s no way, unless we have a huge amount of money, hundreds of millions of dollars come in the own fractional shares that domain names that they’re ever going to trade for what we might call a retail price.
And what that means is that somebody from the outside wants to see what the value of directions.com is. And they see that a share of it is trading for $15 and there’s a 10,000 shares today. They may say the value is 150,000. So if I’m an end-user for that name, why should I pay any more than that?
But if you are the owner or a broker of directions.com and you were talking to a company that could use that, you probably are asking for a million and a half dollars. So I [00:33:00] hope that people outside the industry don’t use the wholesale liquid price. And even though the trading price may be higher than the wholesale price, I hope they don’t use that to an essence, in my opinion, bring down values from what the individual assets are trading for.
And the reason I say this is because most of the assets on rally road are not singularly unique assets. There is more than one copy of the declaration of independence. There are more than one version of a special Ferrari race car. There is more than one Kobe Bryant, rookie card grade in PSA, 10, there is more than one eight NSP.
There is more than one 40 year old bottle of scotch. And because of that, they can trade in the real world for a certain value and it can trade. The one that rally road owns can trade for a [00:34:00] certain value because the highest and best use for that asset is as the collectible. But I don’t believe the highest and best use of a domain name is best.
The collectible, the highest and best use of a domain name is to have someone use it to operate a business or a website, or so when I buy a share of directions.com or any other asset, that’s fractional. I don’t just want to own what a e-liquid no website, undeveloped directions.com looks like I want to own a share of the proceeds from that name being sold to an end-user, who’s paying a price for the highest value that could be achieved from owning and operating a company on directions.com.
Because the highest and best use is not [00:35:00] as a collectible. I think it doesn’t really fit the mold of some of the other assets there. But again, I think as a liquid share of what’s normally an illiquid asset, I think it’s actually going to trade higher. The cumulative value of all the shares might be higher than what it would be valued at.
If there was just one. So I’d love to answer any questions people have about the rally road offering. I’ve spent a lot of time investigating it again to reiterate. I am not affiliated with rally road media options. The sponsor, this is a e-liquid investment. It should not be considered a security. It should not be considered anything else other than a specific share in the company rally road that allows you to participate in the upside of owning an, the asset directions.com, but you [00:36:00] don’t own per se, a share in the asset directions.com.
You own a share in whatever proceeds may come from owning that asset. And as well as the. And I think it’s great for our industry that we’ve, we broke the mold than broken. And I think media options did it. And they’ll always be seen just the first domain name, this’ll be the first shared ownership in a way that, that’s open to a lot of investors.
I think there ended up being 2000 investors in this thing and they’ll always have done the first one. So I really commend Andrew and the team again. But I think specifically there will be more innovation in this space. I think Andrew has done a good job of championing our space. He’ll represent our space really well in interviews and things like that.
And then I think, especially with his team, they’ll be paying particular attention to some of the. [00:37:00] To some of the legal things that they have to be aware of. And on million dollar domains on the week that we we talked about investing we have an offering here, which I think is fantastic.
And I think it gives us something specific to sink our teeth into because we can talk about specifics. We can talk about details. I had a chance to do a little of this yesterday in the legal room, because I think there are a lot of legal implications on there. And speaking of the legal room, Todd, how’d the rest of the room go yesterday and grades.
It went a good page, fell off quite a bit. When you left people were leaving, like it was like something bomb went off. And I don’t like to use that analogy because it’s a metaphor. Okay. So I wanted to ask you, where do I find? Okay. I believe it was 597 investors in the project from what Jeff said yesterday.
And I am still looking for, I was on rally road under the [00:38:00] directions.com. I can only find that little information. I can’t find the detailed, circular or prospectus. I don’t know what they’re calling it, but that’s what I was looking for. Do you have a link to that? I don’t, because it wouldn’t be legal for me to provide that information.
When I bought into the partnership, I have some documents that relate to my ownership of the partnership that I can share with my tax accountant. And that’s about it. It’s not publicly available information. It’s proprietary to rally road. So I would say as of right now, it should be challenging to find and the documents that I have, I can really only use or, I couldn’t certainly show them to anybody or linked to them.
I was curious where Jeff got him yesterday, unless I guess he invested in the project and he didn’t say that, but he had he, he told me he couldn’t share it because you had to log into rally road. And I said, oh, I can log in. But no, I didn’t know that. So I thought w what [00:39:00] do you mean? It’s like a perspective I’m getting ready to do an invest in this.
So I can’t see it beforehand. I got to invest in it and they tell me that. But you can try to go see it, but I can share. Okay. No, I got you. I was curious how it’s set up on rally road. I wasn’t trying to pin you down to, I know that, but I just want to be specific about it. It’s the idea that now I did try to search for some other, whether it was posted anywhere.
I found some initial ones. It was funny. I found some initial ones from 2016 that were like one and a half pages long, and now it’s, it’s longer than that. Trust me. But it was funny to look at the first couple they did. One was for a Lotus car that they did in 2016. And if you think about it, it was it was literally one and a half pages, of the, this LLC agreement.
And just like in anything, it’s only the, when you get, when you start to experience repercussions of not having things in your document that you keep [00:40:00] adding to it. I thought it was interesting that you said that these, we don’t want these values as collectibles and you’re right. That’s the first time I thought of that.
And it’s basically sitting there with a bunch of other collectibles and I like rally road. And I haven’t had a chance. I watched the first half this morning of the domain shirt, but when they were talking about it, the second half I waiting for drew to start talking about it more, cause he hasn’t mentioned much, but what did you see that domain sharpen?
What did you find any other details that were interesting? I did. And I want to, and I think you’ll find that, that he and JT both have to be respectful about what they say and what they don’t say, because you are not allowed to Publicly offered. I’m not an attorney. Please consult your attorney, yada.
But in general, there are some limitations to the public advertising of e-liquid interest offered to accredited investors in exempt securities. And and I’m sure he has to think about that whole. You, I think you and I [00:41:00] share some history as stockbrokers are in that business and there’s rules.
And even though a lot of new companies, especially a lot of new defect companies, they take the attitude, Hey, if I can do it and no one stops me right now, then no problem, but there’s also a long list of companies, especially in the all coin craze where they did come back three years later and tell somebody that you were selling a security and that you have to refund everyone’s money.
And, so I think, there’s has to be a healthy respect for it. And I think Andrew does talk about it on the Sherpa email@example.com. The fact that he’s been working on this for four years and a lot of the. Current events that were happening especially last year, made it so that they had the weight there.
There was some uncertainty about whether they could go forward and I give him credit because I know he’s doing a huge number of things with NFTs and the record label and other kinds of digital [00:42:00] assets. And he stuck with this, even though it was a pre crypto way to do it. And again, just, I respect him for staying with it and getting to the finish line on this one.
Let’s see if we have any other questions about the offering. I’ve got some surprises I found out between yesterday and today, but I’m going to make you guys work for him, you guys and gals. Let’s get back to what we’ve been talking about in million dollar domains. For those of you in the room and listening to the podcast who can’t afford to buy a million dollar domain name, would you want to own a fractional share a partial share of a million dollar domain name and get the economic benefits of owning a certain percentage of a one-word name, say galaxy.com, which just sold for $5 million as a retail sale.
Say that came up and it’s going to be hard to think about it. Say that came up as a wholesale off. And someone had figured out either with an [00:43:00] existing structure or a new structure that you could buy some type of crowds, security, not security, but not a security ownership and galaxy.com. And it was 1,000,005, and your a hundred dollars or a thousand dollars represented a share of galaxy.com and 1,000,005.
And you don’t know if it’s going to sell to an end-user for a half million or 5 million or more as you see this being done now, does it change anyone’s view on whether they’d put money there, whether they put capital there? Because I think that’s when it comes down to it, we’d all like to sell our names faster and for more money than we could get now.
At a wholesale level. So there’s no doubt that we all want these platforms to work as long as we can sell and we can sell to investors. That’ll pay us more than people will pay right now [00:44:00] for the wholesale value of our assets. And we can be liquid and get money out of them and get more than we would if we just did our best to find another buyer at wholesale.
So there’s no doubt, the answer to that question. Would you sell your names this way? So that’s why I keep asking. Would you buy, because if it’s only going to be non domain investors that buy, are we still saying that uninformed people will pay higher prices than informed people and how could that be good for our business?
And that’s the way I think about it, but anyway, Let’s see, who do we have in the room
before I get to the end of my thoughts, everybody, I think will be a seller. [00:45:00] Will anyone be a buyer? Paige, I would be a buyer. I didn’t realize this. Drew said he’s been working on this for four years. And I had talked with that, Aaron, my stat, and for those who don’t know, he’s sold a lot of names.
He worked for heritage oxen, but he tried to do and basically did a partial ownership thing and page. I didn’t realize it was that recent. It was in December, 2019 because I was trying to find a one other that he offered nnr.com the three letter.com partial ownership, 300 shares. You know what?
He valued it out 30,000. So would you rather buy in. Valued at 30,000 or directions valued at 140,000. I know it’s different years, but that seemed like a pretty good deal back then. Yeah. I think that when Aaron did that, to be able to test whether his structure worked and whether there was demand, I think, and I don’t, I know Aaron and he’s a terrific guy and very smart and very experienced, especially [00:46:00] in collectibles and all this stuff.
But I think he felt like I need to not have, there’d be a question about the value of the asset. So I can see if the F the idea of multiple owners works. You know what I mean? You don’t want to confuse the two because then if it doesn’t work, you don’t know what didn’t work. Was it the wrong name, or was it the wrong structure now?
I think three letter names and especially two letter names. That could be something where people would just feel like I want to own a piece of that. I don’t know who’s going to end up using it, but it does have a lot of collector value. And I think it was probably a good place to start. I think Andrew’s effort with directions.
Introduce the fact of some people could think directions is a 30,000 hour name. Some people could think it’s a 300,000 our names. Some people could think it’s X. You know what I mean? So I think that he introduced a much more hard to value asset then Aaron did. But errands was [00:47:00] informal.
I feel and I’m not sure that Aaron hinted at or used a platform that would have had, and again, I don’t know how rally road characterizes their trading, except that they wouldn’t want it to be characterized as trading. Rally roads, liquidity options were more structured and their perception was, it was more of a point and click way to, to change the ownership of your shares.
Then maybe if you owned a partial share in the name and you’d have to maybe email the managing LLC partner to say, Hey, I’ve changed ownership. Can you change the records of the company? To someone else’s name, you see how that might be different than just pointing and clicking. Yeah. And pager, right?
So the directions.com that was minimum or $10 per share, and they sold 14,000 shares, or that’s how that, but so the th [00:48:00] the thing that Aaron was doing, like you sit in formal, he basically had 300 shares at a hundred dollars each. And I don’t know how they, I don’t know how it doled out. I was just looking at my texts the last time I talked with him.
In March or I’m sorry, May 25th of last year. Cause I see it said perfect yet. Call me now in. And we were talking about the money that he spent on lawyers. That’s why, I wouldn’t know. So you spend all this, as I was diving right into now, the wounds of all that money being spent, you want to share what they said yet?
No, he had spent a lot of time and then of course, people come along afterwards and say, Hey, what did you learn? Why did you have to structure it this way and what they say? And of course he. He S he said his lawyers at the time, he said his lawyers assured him that it wasn’t a security. And that’s why he went forward.
What I didn’t ask and I can’t believe whatever happened. Did they make any money sell the name? So I’m going to give him a ring and find out what, how did that end up playing out? And what what does he think about [00:49:00] what’s going on? I’ll see it maybe next Tuesday, if he’ll do that show, but what do you think about and I know you’ve got several other things to go over today, but Chad, he always chimes in Chad focusing.
I see in the comments, everything like, Hey, yeah, I’ve been doing this and yet each shares. So why do you think that’s still people look at that? Just in a different vision, what Chad has always done trying to sell partial ownership. If you don’t mind commenting. No I really liked Chad’s offering we spent about an hour and a half in the hallway at a name’s Khan and he laid it out for me and I was in, he had me at hello.
And I keep telling him I’m ready. I’m ready. Let’s go he’s and he’s ready. Now he’s had to watch the crypto space move. I think this is me as an outsider. I talk with him about once every six months, in terms of gas fees and what chain to put it on. And he’s done a great job of we weeding [00:50:00] through the laws and the regulations and finding a state, Wyoming, or Montana, or somewhere where he can do what he’s doing.
I think his model is fantastic because he bleeds over into the fact that a domain name. As long as you’re going to own a shared interest in the domain name, why not have the domain name be moving and hopefully growing in value. And then why not have the people who participate in helping it grow in value, also be earning shares.
And I think it’s fantastic. I’m frustrated it, isn’t there for me to both invest in now and and work for, if I could take the reins as a short-term CEO for a project and help stage it over six months and earn equity in the name, I’ve told them I’m ready. And I just don’t know, why it just hasn’t happened, but yes, I’m a big fan of what he’s doing.
Cause I think [00:51:00] he takes it. He’s had he’s morphed into the crypto DFI space and takes it into developing the asset. So I liked what.
So here’s the big takeaway between yesterday and today. I did some more research. And at first one of the negatives, not negatives. Cause again, please here. I think what media options and drew have done has been fantastic because th they had to be the first one they had to, in essence, on behalf of the industry, get one out there.
And I was thinking, man, it’s going to be messy to get out of this name. You know it, you have to pay corporate the. You actually pay corporate taxes on the investment if it sells. So then your shares are valued at the amount after taxes. There’s a 50% revenue share that goes to the managing broker.
I don’t know what they’re going to do on the NFTs. They’ve got their, what happens if the apes give out an NFP? What happens if the apes give out the right to mint and NFT? [00:52:00] How do you cut that into 2000 chairs? I know that the trippy for the, for trippy is on rally road now, which I was really surprised to see, but they’re going to have some interesting things there, but a lot of that was solved because there have been assets on rally road that have sold.
What I mean is they’ve sold outside the system where someone wanted to buy the entire asset. And this is where we get the highest and best use of a domain name. Because again, I don’t want to own part of directions.com. I want to own part of a retail sale, or just like the documents say, I get to participate in the upside and value of the underlying asset.
So if directions.com, if we do have a fair market value transaction with a good buyer and I think that could be above a million dollars. This is just me talking. Okay. [00:53:00] Then I was like how does it work? Does the, does rally road decide whether to sell? Does the owner decide whether to sell?
So I was able to find out the answer to the question. Does anyone want to know the answer? Does anyone want to know the answer to the question? Just send me a back gentleman. Do you want to know what happens when someone wants to buy an asset on rally road?
I am really fishing here. All right. I’m going to pretend like someone said yes. Oh, someone did said yes, they want to know. Okay, good. So what happens is, and this happened to a copy of the constitution. Apparently there was a copy of the constitution that was for sale at Sotheby’s where south, however you say it.
And there was a Dow that was created to bid on it and they raised $35 million. To bid on this copy of the constitution. And at the same time, there had just been a copy. That’s called a [00:54:00] broadside toppy, meaning not necessarily an original copy, but something that was printed for merchandising use or whatever.
So not as good as the $40 million one. And it was owned by a group of rally road, people, which again, when I say owned, I mean that they own limited liability company interests to participate in the upside growth in the value of a specific asset. All right. So someone said gee, I want to buy the exact asset that’s owned by rally road.
And so we got a glimpse of what might happen if someone wanted to buy the domain name, directions.com. And what happens is the trading is halted. Like right now there’s a Kobe Bryant Jersey. That’s valued at $70,000. And the trading was halted today because a buyout offer has been presented to the people who own the [00:55:00] shares.
So what happens is the trading is halted and people that own the shares are given a chance to vote on whether they want to sell the asset. Now, I can’t, I haven’t found in the documents. What percentage vote you have to get among the partners? I think rally road. Gets to make the decision whether to accept the buyout offer.
But I think one of the things that they strongly consider is what are the vote of the people who own the shares. So in this case, they voted, no, even though the buyout price was 140% of the IPO price to use trading words, even though, as I’ve said before, these are insecurities. And the constant, the shares in this copy of the constitution hadn’t even begun trading yet.
Just like the shares the ownership, interest, whatever we’re going to call the rally road, item number, [00:56:00] share. I keep using the word shares, but I know it’s not a share. But anyway, it won’t trade for 90 days. So you won’t be able to buy any, sell your interest or buy your interest for at least 90 days.
But anyway, the copy of the constitution hadn’t even begun to sell yet. And there was a buyout offer presented for 140% of the original price and they rejected it. And then I’m pretty sure if I got my Google, and I searched, there was another offer presented for 280%, but that may have been on a copy of the declaration of independence.
So it does look like there’s a way, if someone wants to buy the asset, which is where we get the greatest growth in value in domain names, maybe I should repeat this. The greatest increase in value in domain names, whether small or large happens when it moves from becoming an [00:57:00] e-liquid asset with an unknown future, but a lot of potential.
To a name that’s in play to be purchased at fair market value by an end-user for its highest and ultimate use. That’s how we make money in domain names, $10,000 domain names or million dollar domain names, because domain names are illiquid. The value that they’re worth to just hold them to wait for a sale is a huge discount to the value that probably is received when someone wants to buy that asset and control that singularly unique asset.
And the seller absolutely controls that asset. There’s no other asset like it with the exact word that’s where the big value happens. So I wanted to make sure on these different fractionalization platforms that I get to participate in that. So now at [00:58:00] least there’s a roadmap that someone that wanted to buy directions.com.
Would present an offer rally road would PR would present that to all the stakeholders and they would vote whether to sell the asset. So that’s a big plus from what I thought it was going to be, which was maybe a messier thing. And I think I even said that yesterday, Todd, that I wasn’t sure who got to decide whether who to sell.
I think it is rally road, but they freeze trading and then they present the offer to everybody, which I think is pretty fair. It is like a Dow. What do you think,
Todd? Maybe on the phone, but I think that was a positive and there haven’t been that many assets that. Have accepted a buyout offer. I searched things like rally road buyout offer and there was very few results. And again, I’ve probably got into this more than anyone else, especially in only three days [00:59:00] since it happened.
But for me to see that there was a process to accept a buyout offer where the unit holders got to vote. I thought that was a big deal that it wasn’t going to be a surprise or a one-off or a, a kind of a weird thing. Hey Todd. Yeah. Th there, I guess there is on that rally road, there is a link down on that first page that says legal.
It’s not opening up properly for me, but I think when I was listening to the Sherpa’s show, I heard Brayden’s say that he was looking forward to, he made it sound to me and I got to live there. Like he was looking forward to drew being able to fit, find a nice buyer and sell it, for a. I don’t know if I was listening correctly, but so it’s like his decision from what I thought would be to sell it.
But yeah. I’ll so in the agreement, what’s the closest thing in this prospectus thing, what’s the closest thing to an exit strategy on here? I don’t think they can [01:00:00] say anything about an exit strategy, because again, as part of a offering, you can’t promise or even hint that the people that invest in this are getting anything else than a limited liability share of the growth and the participation of value of this asset.
They have to be incredibly careful, like when we used to do real estate limited partnerships sites, this I used to work on the part of the prospectus. I did four or five of these where I had to do some projections of what company earnings might look like or what the real estate might look like over a five or 10 year period, and I had to, they had to be heavily qualified.
We’re not saying we can re raise rents by 7%, but if we did raise rents by 7% based upon this assumption, these might be the hypothetical results of what this property could be worth in different cap rates. Or when I did an IDL IP, when I did a leveraged buyouts, we had a biotech [01:01:00] company and I put together a plan that said based upon the average multiple of cashflow, that other biotech companies have gone public hat, if a bunch of things happened, but it really had to be conditioned and disclaimed and everything because you really can’t promise anything, because then you’re puffing, you’re hyping and you just can’t do that.
And I’m in a private placement. And that’s why I want to say to anyone listening this that’s all you’re really owning is a share in the, in an LLC share in a some share rally road that allows you to participate in the growth of the value of this asset. And and I think I was just glad to see that there’s a platform for rally road to entertain an offer.
And then if drew is somehow still the broker of record for the. That’s owned by rally road, then that is great because he will be working maybe to [01:02:00] find a buyer. And I know in this case, the seller, whoever the seller is, they they kept about a 40% stake in the name. So they’ll be able to vote, when an offer comes in.
So I thought it was a real positive that there’s a preexisting structure on what to do. If the most exciting thing happens with an asset on rally road, which is someone has presented an all cash offer and the trading would be halted and it’ll be presented to the unit holders. And I just thought that was a real positive and trading doesn’t begin on this particular asset or collectible, whatever they’re called.
Until night for 90 days until 90 days. And that’s when we see, is that really successful? Meaning, sure. It’s successful that it’s sold out. That’s great indications of interest right now. Now page, you made it clear for me the stuff they showed on the website about domain names increasing in value.
It’s like an Ibbotson [01:03:00] chart, right? They’re just showing you, we don’t know shit in the past things they’ve always increased, but we’re not making any specific, claims here. I’m just trying to thank, it was sold, it must be a lot of insiders I’m saying there wasn’t a lot of.
There was zero promise on what’s going to happen with this thing, but, okay. So let me ask you this. And that was it was something about the 90 after the 90 days and then start trading amongst each other. I don’t know, so I’ll give you an idea of what happened today. So there is a board ape that trades on rally road, and you can only trade during the trading hours and it’s called an, the over-the-counter transaction.
Meaning there is no principal broker to buy your shares. The way the New York stock exchange used to be structured. There was a specialist for every stock. And if you had shares of IBM, you walked up to that specialist who ran the book and he had to at least present a bid for a hundred shares of IBM at all times.
Now the over-the-counter mark. [01:04:00] All the over-the-counter market does, is it shows you what other individual investors are willing to pay. And it shows you where other individual investors are willing to sell. And you can either, sell one, share however many shares someone’s working, but they do show you the whole book, but there’s a board aid to trades.
And it’s funny because the board aid in dollars, which the reason it’s funny is because a board eight can go up or down based upon apes going up and down, or Ethereum going up and down. But anyway, just today, like at 9:00 AM this morning, it was trading at Fort. The last trade was 47. Then it traded as high as 49 50.
And now it’s back down to 48 just enter day. And in this case, that valuation is at 775,000 for this specific board ape on number 6 0 1. And when it moves, let me just do my math real quick. Seven hundred seventy five, a hundred forty seven. [01:05:00] So it’s got 16,500 chairs. So every time it raises a dollar or two, or it goes down a dollar or two, that’s an essence adding or subtracting a $16,500, to the asset.
And you do get a full picture of the order book. And what I mean by that is say you wanted to buy 20 shares of this board. Ape. You’re not guaranteed that you can buy all 20 at 48. Right now you might have to buy four of them at 48. Six of them at 48, 59 of them at 50 or something like that. So you do get a peak of that when it comes to the aftermarket trading and it isn’t exactly at 90 days they have a lot of, they take assets after a 90 day period, and then they put them on a schedule.
It looks like, and they say, Hey, there’s 20 new assets that are going to start trading this week. And the other apes the trippy for, and the laser eye and the other one they’re between the zero [01:06:00] period and the 90 day period, so they’ve IPO at a certain value, the trippy IPO to 820,000. There’s a couple others that IPO only at 190,000, and those are going to start trading here in the next and the next two months sometime.
So as we wrap up today, and if you have a question, please raise your hands soon because I do have a hard stop at 15 after. We do have an offering. We have a shared ownership. We have a shared ownership, crowd ownership platform on a major of a domain name on a major platform and whatever we’re going to call that, we’re going to say that the first one was done on Friday sold out in 14 minutes from the official offering time to when it was sold out. Congratulations to media options.
Do your own due diligence please research everything on rally road. These things are being done as exempt security. [01:07:00] You do not have the protections you would normally have from the sec, from the NASB, from the setbacks your cash is not protected. You don’t have a lot of the protections you may think to exist when you’re dealing with publicly traded securities.
And even though this might, have some neat aspects of it that look nice and you’re doing it on an app, in essence, you’re doing the same thing as if you would have, had documents into you, you would have signed the documents and send them back via FedEx of this was 20 years ago.
But the important thing is it does look like they have automated the process of when you sell your, share your ownership interest in this LLC, or buy them that you can take comfort that it is being recorded on the books and records of the manager of the LLC. And I think that’s the most important thing that you’re looking for when you enter into a shared ownership transmit.
Is legally that’s the time when [01:08:00] you spend your money or at the time that you received your money is a record of what you’re buying. You’re selling, being recorded on the official books of the entity. And I think that’s what rally road gives you some comfort on is that is taking place. And I think in this case, it’s not a decentralized blockchain, it’s a centralized ledger is what I’m going to use the word which I think is good.
I don’t necessarily want to invest in a shared ownership asset of thousands of dollars and find out that because of a wallet address makes up for a hack or a high gas fee. What I thought I was buying I did. And then when I thought I was selling, I didn’t, and I think that the blockchain options that come with.
I’m going to apply a real high bar to them if no one else does, because I’m interested in this space. Because I do have comfort in the centralized method where one for lack [01:09:00] of a better word, if you have like a president and a secretary of a corporation, that there is an official secretary who is changing the records, each transaction as to who owned shares so that if, when you buy your shares, a buyout offer does come that you’re both presented with the ability to vote on that buyout offer.
And if it’s accepted that you received the funds from the buyout offer. Congratulations again. Todd, thanks for coming up and asking those good questions. I know you’ve got a specific use case, and I know we’ll talk about that together, but I think for everyone who listened today and who listened the last couple of weeks, hopefully by talking about things beforehand, we were ready for this.
I’m ready to discuss it. And I think, I’m, after anything that gives us innovation, but the one negative I see, and it’s not a negative, it’s nothing that, the Druid done or rally road has done or anything. It’s just, I would [01:10:00] hate for the crystallization in the mind of the public about the value of domain names to be skewed toward the wholesale level.
Just like I don’t like the fact that named bio is one of the publicly available ways. People have to see where domain names trade, and in most cases, It is because it’s a wholesale price option with a select group of people who have to be members of GoDaddy auctions and have to be ready, cash on the barrel head to close the transaction within one day, for whatever they bid with no idea, if they’re ever going to use the name because they’re buying an essence and an asset with potential value but it’s not the highest and best use.
We’re not reporting prices based upon a fair market value transaction between a willing seller and a willing buyer. And [01:11:00] in the case of expired name auctions, we have a absent seller. We have a seller that didn’t renew their domain name, who made the asset available. And we have a registrar who just wants the money from an expired domain auction, however much it is that day.
And I don’t think that’s, if that’s the definition of a fair market value and I would say. Hate to see is that the perception to the public because we’re not well-known in the public and how much the domain name is worth in the public size is not well-known that we would not provide them easy to look at values of domain names.
Cause as opposed to the other collectible assets on rally road that are probably trading because those assets exist in the real world, somewhere, that exact asset that you’re owning exists in the real world. With domain names, they are singularly unique and I think [01:12:00] they’re not going to trade unless we have a huge amount of liquidity come in.
In which case, they could, what a domain name like directions.com. If hypothetically it had an old. End-user value of a million dollars. You know what it traded that on rally road. And the answer in my opinion is only if there was such, there had to be a large amount of liquidity that was willing to pay up to a 10 or 20% discount to the retail and user, because it was so likely that one word domain names could be sold at any time to an end user, not the three to five years that we, you might have to wait now, but at any time, any one word domain name could be sold for a retail price of one to 2 million and therefore fractional shares of that should trade almost up to its ultimate value.
And I think that’s what we picture when we [01:13:00] think of the future of shared ownership, a domain names that it would be shared ownership with liquidity. That would train and only a small discount to domain names, ultimate values. But until that happens, I’d hate for us to value names, to retail and users at the price they might be shown at when you’re mostly talking about wholesale people or people having to pay a price with no outcome insight.
So thanks everybody today. Thanks of useless listening to the podcast. You can listen to the previous two episodes of million dollar domains, where we talked about some different aspects of shared ownership domain names. And it was just happenstance that in the middle of that we have this offering of directions.com on rally road.
And just to make sure I’ve said it again I am not offering a security. This is not a publicly traded security. This has being offered under an exemption to the securities rules. [01:14:00] I’m just discussing it as a point of interest as an indication of what may happen in the future. Then please don’t take anything I’ve said as advice or anything I’ve said that would ever classify this offering is a security.
So thanks everybody.