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The Full Monte: Why an Industry Pioneer's One Stop Shop Kept Expanding Long After the Bubble Burst

By Ron Jackson
Editor/Publisher    

Archived 12-01-03

Monte Cahn is the real Six Million Dollar Man. Actually he has done more business than that – we just got tired of counting. Cahn was the lead partner in brokering the industry’s first one million dollar sale when his firm, HitDomains.com (now DomainSystems.com) helped broker the sale of WallStreet.com for $1.03 million in 1999. The record didn’t stand for long though. Cahn topped himself just months later with the $2.2 million dollar sale of Autos.com to CarsDirect.com. It was the biggest cash transaction in domain name history at the time and many say those two deals triggered the buying frenzy that followed (and continued until a price meltdown finally hit the business).

 

Monte Cahn's Companies

Yes, the bubble did burst, but Cahn barely got wet. DomainSystems also conducted or assisted in the sales of such gems as eCommerce.com, eToys.com, Mortgage.com, Celebrities.com, Hotel.com, Guns.com, OfficeSupply.com and many others. We ran out of zeros on our calculator before we could total it all up. In the midst of disaster, with competitors on all sides dying, DomainSystems thrived. We’ll explain how Cahn pulled off that remarkable feat but first let’s back up a moment and ask the obvious question, “Who IS this guy?!” Your first thought is that he must be some kind of real-life Joe Hardy (the guy in Damn Yankees who sold his soul to the devil so his hapless Washington Senators could win a World Series). 

In this case, Lucifer had nothing to do with it (he was presumably busy working on VeriSign’s business plan at the time). The story still seems supernatural though, especially when you consider that ever since he was 13 years old, Cahn knew exactly what he wanted to do with his life and by the time he was 31 he had done it. It was only after reaching the pinnacle of one profession that domain names lured him into another.  

Cahn grew up in Cincinnati, Ohio where his parents ran a successful furniture business. Every week his mailbox filled up with letters from his grandmother who lived in San Diego where a biotech boom was underway. “She kept sending me articles about this exciting new industry,” Cahn recalled, “I soon decided what I wanted to be when I grew up! Starting in junior high school I geared all of my elective courses toward a career in the medical field.” 

When he graduated from high school, Cahn crossed the Ohio River to attend the University of Kentucky, a short drive down I-75 in Lexington. During his junior year at UK Cahn became an intern for a medical equipment company and wound up shocking them by becoming their top salesman! “They wound up putting a branch in Lexington just because I was there,” Cahn said. Using his earnings to pay his own way through school, Cahn graduated in 1987 with degrees in Marketing and Biology and he would make great use of both disciplines.  

Shortly before graduation Cahn had started his own business marketing specialized cardiology equipment. Once he got his diploma he decided to moved to South Florida because he realized two things. One – the high ratio of physicians and hospitals per capita would give him a bigger market for his goods and Two – the weather and beaches in Florida are much nicer than the ones in Kentucky. 

In 1989 Cahn caught the eye of drug giant Eli Lilly who recruited him to take over sales for a struggling subsidiary they had in Miami. That branch of IVAC Corp. was ranked near the bottom of Lilly’s national territories at #111. Within two years, Cahn had moved them all the way up to #4. Now it was time for a really bold move. 

“A group of other senior managers decided to join me and go out on our own,” Cahn said. They founded Pyxis Corporation and based it in San Diego where his medical dreams had started with those letters from grandma. “Pyxis invented automated medication and supply distribution systems that are now used in almost every hospital in America and around the world,” Cahn said. “We took the company public then sold it to Cardinal Health, one of the world’s largest drug distributors.”  

As any entrepreneur will tell you, the real thrill comes from the chase rather than the reward at the end. Cahn wanted a new challenge so he started helping out another startup that had invented an online medical records system. The company’s ideas were ahead of their time but they showed Cahn the unlimited potential of the Internet 

“In 1996, the son of one of my customers told me he had been buying domain names because they were the electronic equivalent of real estate,” Cahn recalled. “I liked what I heard and formed a sideline business with him.” Together they started the first domain brokerage on the net at NameShop.com, well before Great Domains and Afternic arrived on the scene.  

Cahn also started building his own portfolio and soon left that partnership to pursue bigger game. He wanted to handle the most valuable domains on the market and established HitDomains.com to pursue his goal. The company’s multi-million dollar blockbuster deals in 1999 lit a fuse under the entire industry. In 2000, HitDomains merged with another industry leader, SolutionHome.com, giving Cahn a pair of talented new partners and a new corporate name, DomainSystems.com. The revamped company set up shop in Pompano Beach, Florida, right in the middle of Cahn’s old medical stomping grounds that had now become a hotbed of internet business activity.  Sportline.com, Valueweb.com, Citrix Systems, Verio and IBM are all within 5 miles of the DomainSystems offices.

Cahn, who is now 38, serves as CEO for both DomainSystems and Moniker.com (his ICANN approved registrar). 35-year-old co-founder Eric Harrington is President of the two companies. Harrington is a Michigan State graduate with an MBA from Harvard. 40-year-old attorney Joel S. Magolnick completes the triumverate as co-founder, General Counsel and Vice President. Joel is also the managing partner of his own law practice in Miami where he got his Juris Doctor degree at the University of Miami. 

This is where things really get interesting. DomainSystems.com was formed just as the bottom was starting to fall out of the domain business. The earthquake that rocked the industry leveled most other start up companies, but as Cahn surveyed the rubble he saw only opportunities. 

Some great domain names were suddenly becoming available from companies that were now in bankruptcy. Because of DomainSystems track record in brokering high dollar deals, the courts usually turned to them to get the most money possible from the remaining domain assets. “When many others were stuck, we were hired and that helped fund our business while times overall were tough,” Cahn said.  

That is how Cahn wound up handling the sales of eCommerce.com, eToys.com, Mortgage.com and some of the other blue chip names mentioned at the top of this article. That process continues still today with DomainSystems waiting for court clearance to begin marketing the Excite@Home portfolio. 

With their history of success and expansion into a complete line of domain services (corporate domain management, expired/drop domain services, traffic monetization services, registrations, brokering, traffic monitoring, appraisals and hosting to name a few) DomainSystems also began attracting business from America’s largest corporations. Disney, Miramax Films, Toyota, Proctor & Gamble, Bank of America, the National Hockey League and dozens more came to him to manage and protect their invaluable domain assets. Cahn said “We maintain the most secure registrar and DNS management system to ensure uptime for our clients. To date we have never lost a domain and our registrar has never been down. No other registrar I know can make that claim.” 

DomainSysyems/Moniker also has a client list that reads like a Who's Who of high profile domain industry figures. The roster includes BuyDomains.com, Thunayan K. Al-Ghanim (Elequa of Future MediaArchitects), DomainDeluxe and NameAdministrator among others. Cahn draws successful clients like a magnet because he understand why they are successful. "They understand the market and recognize the domains that will result in the highest paying traffic," Cahn said. "They also know when and at what price to sell a domain when the right opportunity comes along. We have sold many names for our customers which funds their various business opportunities and additional acquisitions."

DomainSystems acquired Moniker.com just last year and the registrar has played a key role in continuing to attract major clients. Originally known as MrDomReg.com, Moniker started in 1999 when it became (and remains) the only registrar to pass its ICANN accreditation and registry connection requirements on its first try. When Cahn bought the company it had only 1700 domains on the books. Within a year, that number soared to over 150,000 and growth continues unabated.  

Today Moniker is one of the five fastest growing registrars on ICANN’s approved list of 160. They rank 19th in registrations and Cahn says they will reach the Top 10 by this time next year. “We continue to add 12 to 20 thousand registrations per month while most other registrars are losing market share,” Cahn said. “We expect to double our business in the next 6-9 months”. 

For those more interested in the domain aftermarket, Cahn said the average retail price realized by sellers who use DomainSystems is the highest in the industry. “Being a one stop shop featuring experience, legal and escrow has allowed us to attract the most valuable domains to sell and that has kept our average sales higher than the others.” Cahn added “We also have contacts with the right potential buyers which gives us an edge when marketing high profile domains.”  

Whatever they are doing it is working. They now have several hundred thousand domains and active websites listed for sale. Most DomainSystems clients sell their domains through the company’s combination For Sale/Pay Per Click pages as this allows them to collect revenue from traffic while names are on the market. Cahn has some good news for those clients and everyone else in the industry. “We are seeing a huge upswing in valuations and that is a good sign for the future,” he said. Six figure sales are even starting to pop up again. “We are currently working on some big sales, including Shanghai.com which we feel will bring in access of $350,000.” 

Whatever service a client might need, Cahn intends to provide it. Though resellers often debate the value of domain appraisals, many companies and individuals require them for tax purposes. DomainSystems covered that base long ago. “We invented the first domain appraisal system and have done over 380,000 appraisals to date,” Cahn said. “The criteria from our system are now used in more than 95% of all domain appraisals on the web. Our appraisals are also accepted by the IRS to value charitable domain donations.”  

In January of this year, DomainSystems added the latest piece to their corporate portfolio by launching their own web hosting business, CoolHandle Hosting at CoolHandle.com. While many of the company's enterprises are aimed at corporate level clients, CoolHandle was designed for small business and individual webmasters. DomainSystems/Moniker manages to keep all of their balls in the air with a 10-person staff at their main office and an additional half dozen handling web hosting support at CoolHandle. 

While tending to his own business, Cahn also keeps an eye on important developments in the industry at large. Though it is currently on hold, VeriSign’s proposed WLS system has certainly not escaped his attention. “We are totally against WLS and are actively involved in a lawsuit against VeriSign and ICANN. Monopolization of the market can only hurt the industry as a whole, not help it,” Cahn said. 

Those who support WLS claim it is needed to “level the playing field” and give everyone an equal opportunity to acquire the best expiring domain names. Cahn doesn’t buy that. “I believe that domains are just like real estate. Anyone has the right to buy property if they have enough financial and/or creative resources to do so,” he said. “The difference is that our segment involves a level of technological sophistication that many without resources do not have. I believe that domains are a public resource until they are registered but then they become personal property.”  

While some are jealous of the success the major players have had in the expiring names market, Cahn believes those players are the very thing necessary to have a thriving market. “Because they know how to monetize the domains, our industry will continue to grow and remain strong. Just imagine if all of our domains were just registered and renewed and not making any money or not becoming someone's dream business,” Cahn said.  “Many criticize those that capture dropped names first and use them in unique and rewarding ways. But this is what keeps everyone interested in this market and I believe it will grow exponentially as more people jump on the web.” 

WLS is obviously a sore spot with Cahn and he views VeriSign’s recently derailed Sitefinder scheme (one they threaten to resurrect in the future) with equal disdain. “I feel that Sitefinder is totally illegal and an unfair marketing practice,” Cahn said. “VeriSign's move jeopardized the technological structure and foundation of the internet. As a registry and provider of registry services to registrars, they have no right to hijack the unresolved domain traffic.”  

Cahn clearly recognizes the value of traffic so, when you consider how many great domain names have passed through his hands, you have to wonder how many he has in his own portfolio. Cahn said  “I still have many of my original names from 1996. Most are domain related or geared toward our business and future business ideas. I was fortunate enough to grab a few 2-character and short word domains that are valuable today, but I certainly don’t have the quality of names that many of our customers like Ultimate Search, Elequa and BuyDomains have.” Cahn added, “My partners and I have always spent most of our time and our company’s time on providing services to our customers rather than harvesting inventory for ourselves.” 

Though 1996 was just 7 years ago it was a much different world in domain terms. “Back then domains were $70 and sometimes as high as $100 each. We registered about 1,000 of them so it was quite expensive to maintain a large inventory,” Cahn said. “That forced us to learn how to sell and monetize them very quickly.” Cahn added that back then no one really understood the value of traffic or search engine placement. “Today that is the most important valuation criteria rather than just the brand name itself,” Cahn said. 

So here he is, just 7 years after entering this business, with a company that is one of the largest privately held domain services firms on the Internet. Asked to sum up what sets DomainSystems/Moniker apart from the crowd Cahn said  “We are unique. We are the only ICANN accredited registrar that also has a thriving after market business, as well as hosting and email services. No other registrar is offering all of that and best in class service in one spot today.”  Judging from the company’s past they will be offering even more tomorrow.


Editor's Note: If you wish to contact Monte Cahn he can be reached by email at Monte@Moniker.com or Monte@DomainSystems.com, or by phone at 954-984-8445. 

If you would like to comment on Ron Jackson’s article, write editor@dnjournal.com
  


If you missed our previous Cover Story click on the headline below: 

OFF TO SEE THE WIZARD:
WILL WLS DEMOLISH DOMAIN DROP CATCHERS?

 


All other previous Cover Stories are available in our Archive

 

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