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It Pays to Be Patient: How Michael Castello & Walt "Baby" Love Landed a $1.5 Million Deal for Room.com

By Ron Jackson

Very few people in the domain investment world have been it as long (and as successfully) as Michael Castello has. His track record stretches back 25 years to the mid 90s and the many home runs he has hit along the way have been well chronicled, including in our 2006 Cover Story profiling Michael, his brother David and the geodomain empire they built at Castello Cities Internet Network, as well as a 2014 Cover Story detailing the amazing history behind Michael's $3.1 million sale of Whisky.com

Now we can unveil, for the first time, another chapter in the Castello saga - this one centered on a $1.5 million deal Michael has just made to send Room.com to the owners of GetRoom.com, a well established corporation that helps companies find innovative ways to increase their available workspace. Room.com will give them the kind of unforgettable one-word .com brand that so many growing companies are looking for today.

As with Whisky.com, there is a fascinating back story to the Room.com sale. While the domain is being paid for over 60 months Michael will be splitting  that healthy annual income 50/50 with nationally known, award winning

Michael Castello 

radio DJ, Walt "Baby" Love. Yes, as much as has been written about Michael there are still stories you haven't heard, including this one about how the long time friends came to be investment partners in a select group of generic .com domains over two decades ago.

Michael explained how he and Walt first met. "In 1991 I was pioneering direct access audio technology," Michael recalled. "I had bought a digital recording system that I put together with Spectral Synthesis that could record 16 digital tracks. It cost me $100,000 for the system, but I was doing things with recordings that no one else was at the time. The technology took music from tape and vinyl to digital files - the types of systems everyone uses today - and it was a great time to experiment."

Michael Castello at The Roxy in Los Angeles (circa 1992) where Mix Magazine was covering new technology he was utilizing for live recording at the famous night club, as well as at the Whisky A Go Go.

"I had a friend who was an executive at Tin Pan Alley Records who knew a radio personality named Walt "Baby" Love at Westwood One (they were mass media giants in radio)," Michael said. "He wanted to introduce Walt to me and my new studio. Walt is one of the radio greats in syndicated R&B radio, and he was also a writer for R&B Magazine with Robert Kardashian."

"Walt had the long-running R&B radio program The Countdown, and was starting a new gospel radio show called Gospel Traxx (a show that wound up being carried by 132 radio stations across the U.S. and 15 more overseas). My computerized studio, Powwow Productions, was set up in a room of my apartment in Playa del Rey, California. I also happened to have a beautiful view of the wetlands and the ICANN twin towers in Marina del Rey," Michael recalled -  an interesting foreshadowing of the domain career that was still ahead of him.

 

"When Walt came into studio room he asked, "where is the studio?" I showed him the computers and digital converters, and he looked puzzled. I asked him to sit down, placed a microphone in front of him, and asked him to read something. I switched on the computer and started recording. He began reading with his golden voice, and after making a mistake he stopped and asked if he could start over. I told him to just continue reading and correct as he read along. When he finished, I quickly edited his mistakes out and played him back a flawless performance."

"He didn't understand what had just happened! In those days, a recording artist would have to wait for the tape recorder to stop, rewind, and re-record. I cut that process out completely and made recording a lot easier. He took a moment, then told me he needed to do his new Gospel Traxx show at my studio. That started a friendship that continues to this day, 16 years and 600 shows later. Walter was smart enough to know when a new technology was going to be a huge benefit."

Walt "Baby" Love in the studio.

While Michael's audio technology was on the cutting edge of that era, domain names were still so new almost no one had taken notice of their commercial potential, other than Castello and a handful of similar pioneers. "From 1995 to 1997, Walt watched me register domain names," Michael said. "We spoke about it, but I donít think he understood the nature and future of the internet. When I made my first sale, letting Powwow.com go to VOIP operator Tribal Voice for $25,000, Walt asked if he could get involved. I registered names for him in early 1997 that he paid for, and we split ownership 50/50."

 

 

 

 

 

 

Image friom Bigstock

"We got generics like Room.com, Wash.com, LYL.com, Racer.com and Mouth.com. There really was no risk at the time. When Network Solutions started to retroactively charge $100 for names that were previously free, many owners of domain names decided not to pay out of protest. I waited for the drops that summer. I was aware there was a seven-day buffer for submitted registrations. As an example -- if the drop date would be June the 14th, I would submit registrations for that name, every hour on every day, starting on the 7th. When the drop date hit, my registrations were already waiting in line," Michael said.

To get the kind of paydays Castello did with Whisky.com, Room.com and many others, you have to be patient and have a strong enough belief in the value of a great domain name to say no even though someone is waving tens or even hundreds of thousands of dollars in your face. That is not easy to do when you never know when or if a better offer will come along. Michael said, "Walt has been patient, and I had turned down many six figure offers, but I valued the name in the seven figures for some time. With any generic, there is the easy money and then there is the big money. You must have patience for the big payday. Walt trusted me over the years to do that."

Their patience paid off as the right end user, GetRoom.com, finally arrived. Michael told us how the deal came together. "Mark Daniel from Domain Holdings contacted me last year. He had a potential buyer, but the offer wasnít in the right price range. Still, Mark stayed in constant contact with me and was great at getting the deal done. Itís a process in which you have to feel out the situation. In the last two months, the contract and sale came together rather flawlessly." 

"It can be difficult sometimes. dealing with a middleman, but Mark was instrumental in the success of the deal and has the experience to know what needs to be achieved to get the job done. He worked hard getting the buyer to understand why these names are so highly valued and what a brand like Room.com would do for their company and future," Michael said.

Mark Daniel

"These generic domain names are somewhat like your children," Michael added. "I am always looking for a way to hold on to them. You work with them over a long period of time with a vision. Then, you realize itís the right time to let them go with the right future in front of them and the wind at their back. I am thrilled with how Room.com will be used.

While Michael has had many huge sales to celebrate this is the first big one that Walt co-owned. It was a thrilling new feather in the cap of a man of many talents. In addition to being one of the nation's best broadcasters, Walt is a  former paratrooper who served two tours of duty with the 82nd Airborne in Viet Nam. We asked Michael how his friend reacted when he got the  good news about Room.com. 

"Walt is also a pastor who serves as the Minister of Entertainment at First AME Church in Los Angeles," Michael noted. "His response was ďPraise God!Ē  You would expect nothing less from Love, who, in 2007, also published a book - The Gospel According to Rev. Walt 'Baby' Love: Inspirations and Meditations from the Gospel Radio Legend - that continues to be a steady seller today. 

Michael and Walt's Room.com deal comes on the heels of the biggest all cash domain sale ever reported, Voice.com at $30 million in June. That was more than double the amount paid for the previous record holder and while many were surprised by that, Michael was not among 

them. "Iíd gotten a lot of flak for suggesting that my portfolio was worth $1.2 billion back in 2014.  Michael Berkens had calculated that the forty names I was selling at the time would have to be worth $30 million each to reach that number," Michael recalled.

"I am a firm believer in domain names and their relevance for the future. These types of generic domain names are rare and worth a lot. Those potential buyers that have an understanding and belief in their need, at some point will pay whatever is needed to attain them. I think there will be more of these types of sales in the future."

History does suggest that the sky is indeed the limit. In the mid 1990s a lot of people were telling Castello and the other pioneers they were crazy to pay $100 for a domain name. Since then we have seen many of those $100 (or less) purchases sold for millions of dollars, so who really knows how high the ceiling will be for great one-word .com domain names? 

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