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Here's the The Lowdown from DN Journal,
updated daily
to fill you in on the latest buzz going around the domain name industry. 

The Lowdown is compiled by DN Journal Editor & Publisher Ron Jackson.

I'd Rather Go Blinds! Marc Ostrofsky Gives Us the Inside Story on Home Depot's Big Purchase of Blinds.com 

Near the end of last week long time industry  friend Richard Meyer sent me a link to a story in the Wall Street Journal about Home Depot acquiring Blinds.com, the world's largest online window coverings retailer. Richard thought this example of a giant retailer recognizing the value and massive growth potential of a successful  ecommerce site built on a category defining domain name would be an interesting story for our readers. 

It is certainly that, especially since I immediately recognized Blinds.com as a domain and business that another friend, domain investing pioneer and best selling author Marc Ostrofsky, had been an early investor in (an investment Marc noted in a 2011 DN Journal Cover Story profile about him). So, over the weekend I caught up with Marc to get the inside story on how he and his partners turned a local Houston based blinds store into a global ecommerce juggernaut that Home Depot spent big to get (exactly how big is subject to a non disclosure agreement, but considering that Blinds.com did over $100 million in sales in 2013, you know Home Depot's check had to have a lot of zeros in it). 

Marc Ostrofsky

 

Ostrofsky said the story began back in 2002 when he first met Jay Steinfeld. "Jay was running a retail blinds biz called Laures Blinds and Drapes in Houston and was running a small website called NoBrainerBlinds.com," Ostrofsky recalled. Marc also remembered that the company was doing $1 million a year in sales. "The numbers online REALLY impressed me a LOT!," Ostrofsky exclaimed. Steinfeld was looking for investors to help grow the business. Ostrofsky decided this was a venture he wanted to be part of so he became the first outside investor and an active board member, and  also brought in two other investors who were friends of his

"When I saw the bottom line profits for online sales was much better that retail and all of the "moving parts" that retail comes with, I demanded a few things when I invested...eliminate the two physical retail stores, buy the domain Blinds.com and concentrate on building the online brand...less moving parts and larger profits," Ostrofsky said.  

Blinds image from Bigstock

"We agreed to buy the Blinds.com domain with payments to be made over a few years...but when we saw sales skyrocket, we move quickly to buy the name outright.  We asked the seller if he would discount the price if we bought the asset outright and gave him the rest of his cash all at once....and yes, he gave us an even better price," Ostrofsky recalled.  

"We had the two websites (NoBrainersBlinds.com and Blinds.com) running at the same time for a few years then decided to spend most our funds to build up the Blinds.com brand. The marketing and statistics team was led by a brilliant guy named Daniel Cotlar (who was and is THE most amazing guy I have ever met in that job). Together, Steinfeld and Cotlar were and are an incredibly impressive team and with the Blinds.com sale, both now work for Home Depot."

In an anecdote that underlined just how successful the company's online strategy has been, Ostrofsky noted, "For a few years, we sold Hunter Douglas blinds on the site but we were SO incredibly efficient at it and the prices were so low that the Hunter Douglas owners pulled their brand from all online sources because their retailers complained that they were losing sales to us.  It was true...our online model was and is so INCREDIBLY efficient that their retailers could not compete efficiently."

"That said, and speaking just as a private observer who has no relationship with Home Depot, I bet that Hunter Douglas comes back online when the owners figure out what an incredibly short sighted move that was to pull out of the online world...as if they were being blind to the existence of the internet and the incredible power of this sales medium!" Ostrofsky said. "I can tell you this...when we dropped the Hunter Douglas line, we didn't lose a penny of sales as folks simply migrated to a similar product at a MUCH lower price. It was so funny...but true.  Jay and company didn't miss a beat and the company kept on growing," Ostrofsky said.

Get Rich Click! Author Marc Ostrofsky on ABC-TV's The View (June 9, 2011)
(L to R in the photo above): Whoopi Goldberg, Joy Behar, Marc Ostrofsky
Sherri Shepherd, Elisabeth Hasselbeck and Barbara Walters. - See more at: http://www.dnjournal.com/cover/2011/june-july.htm#sthash.q2RPlShe.dpuf
Get Rich Click! Author Marc Ostrofsky on ABC-TV's The View (June 9, 2011)
(L to R in the photo above): Whoopi Goldberg, Joy Behar, Marc Ostrofsky
Sherri Shepherd, Elisabeth Hasselbeck and Barbara Walters. - See more at: http://www.dnjournal.com/cover/2011/june-july.htm#sthash.q2RPlShe.dpuf
Get Rich Click! Author Marc Ostrofsky on ABC-TV's The View (June 9, 2011)
(L to R in the photo above): Whoopi Goldberg, Joy Behar, Marc Ostrofsky
Sherri Shepherd, Elisabeth Hasselbeck and Barbara Walters. - See more at: http://www.dnjournal.com/cover/2011/june-july.htm#sthash.q2RPlShe.dpuf
Get Rich Click! Author Marc Ostrofsky on ABC-TV's The View (June 9, 2011)
(L to R in the photo above): Whoopi Goldberg, Joy Behar, Marc Ostrofsky
Sherri Shepherd, Elisabeth Hasselbeck and Barbara Walters. - See more at: http://www.dnjournal.com/cover/2011/june-july.htm#sthash.q2RPlShe.dpuf
Get Rich Click! Author Marc Ostrofsky on ABC-TV's The View (June 9, 2011)
(L to R in the photo above): Whoopi Goldberg, Joy Behar, Marc Ostrofsky
Sherri Shepherd, Elisabeth Hasselbeck and Barbara Walters. - See more at: http://www.dnjournal.com/cover/2011/june-july.htm#sthash.q2RPlShe.dpuf

Marc Ostrofksy on ABC-TV's The View in June 2011 to talk 
about his New York Times best selling book Get Rich Click!

"I think my job in advising firms like Blinds.com is to constantly challenge the thinking of the day to day CEO and throw new ideas on the table while keeping that CEO accountable," Ostrofsky said.  "Jay never missed the mark...which was truly impressive!  Along the way, to spur growth, we allowed a large VC to invest which allowed us to buy out a few partners I personally really did not care for, take a few bucks off the table ourselves and create a world class board of directors."

That all resulted in last week's BIG payday. Perhaps it will also produce a chapter in Marc's next book (he already has two best sellers under his belt in Get Rich Click! and Word of Mouse). In any case, it's another home run for Ostrofsky, who has been making waves ever since his historic 1999 sale of Business.com in a $7.5 million deal (a domain he had purchased two years earlier for just $150,000).

(Posted January 27, 2014) To refer others to the post above only you can use this URL: http://www.dnjournal.com/archive/lowdown/2014/dailyposts/20140127.htm


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