August 2010         DNJournal.com     The Domain Industry News Magazine

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Developing Story: Rob Monster's Grand Plan for Epik.com and Why Parking Won't Be Part Of It 

Rob Monster, the Founder, Chairman and CEO of Epik.com, has ambitious goals for the company's new custom domain development platform - goals that include nothing less than "building a better and more useful Internet."

Toward that end, Monster will host the 1st Annual Epik Developers Conference September 15-17,2010 at the Edgewater Hotel in Seattle. We connected with him to learn more about the conference, but the discussion wound up covering much more ground than that, including Monster's take on the shaky state of domain parking and the future of domain development. Our complete conversation is below.

DN Journal: The conference calendar is already bursting at the seams, but given the exploding interest in domain development one has to wonder why no one has put together a conference devoted solely to development across all categories before now (one of my favorite conferences, the GeoDomain Expo has always been about development, but it, of course, focuses on a single sector). Tell us the events and circumstances that led to Rob Monster being the guy who wound up addressing this need?

Rob Monster
Epik.com Founder, Chairman & CEO

Rob Monster: The domain industry is going through a period of rapid evolution. The traditional economic model of “buy and park” is breaking down very rapidly, and the expectation that it might recover has now given way to the reality that it almost certainly won’t. This may come as a surprise to some, but I personally was never a believer in parking. Even today, I am still blown away to see amazing domain names being used as parking pages rather than as developed sites.  The evolution is far from over.

As for how I got to this place, looking back, Healthcare.com and Patents.com are two examples of domains where I contacted the owners to understand their intentions for the domains and ultimately collaborated with those owners to develop sites, either as co-developer or investor. Along the way, I learned a lot about domain development and the steps required in order to transform a raw domain name into a valuable online brand. 

At the same time, I was also looking at scalable approaches to domain development. I had the opportunity to make an angel investment in what is now known as DevHub.com as well as Internet Real Estate Group. I was closely studying various approaches to scalable domain development, particularly as it relates to mapping useful content and information to domain names.  It was not obvious to me at that time that anyone had a clear vision for domains as the raw land of Web 3.0.

In effect, Epik was the fusion of two ideas: (1) premium domain development with (2) scalable domain development, and (3) a vision for a better and more useful Internet. We apply the best of what we learn about premium custom development to a scalable, low-cost approach to domain development which can be extended to larger numbers of domains. We have overlaid this with a vision for Web 3.0 – what we call “The User-centric Semantic Web”.

DN Journal: At the 1st Annual Epik Developers Conference, what kinds of specific things will attendees learn that can help them turn their non-producing domains into websites that generate revenue? Also, who are some of the experts you have lined up as speakers and panelists to provide guidance on these topics?

Rob Monster: When we first started the planning for the Epik DevCon, we were wondering would anybody come besides our most loyal customers and partners. Well, I think we have answered that question based on the list of confirmed attendees and the continued interest among new registrants. We are excited to put on this event. I am personally committed to making sure that every attendee gets more out of it than they put into it. The generous provisioning of Developer Credit is just one example. It is also important to understand that this conference is more than an event – it opens a dialog that goes on before, during and after the conference. We are equipping each attendee with access to people, tools and technology to cost-effectively apply our proven methodology to Acquire, Develop, Operate and Sell domains and websites

Some of the speakers we have lined up are hands-on veterans in each step of the value chain of Acquire-Develop-Operate-Sell, and in many cases already working with Epik and Epik Developers. In addition to members of Epik executive team, attendees will hear from:

- Jay Lohmann of Tag Team Creative (Online Marketing)

- Chris Pirillo of LockerGnome (Social Media)

- Chad Fisher of Pyramid SEO (SEO)

- David Fairley of Website Properties (Selling a website)

- Colin Pape, CEO Shopcity (Keynote speaker)

- Andrew Allemann of DomainNameWire and DNWStats.com (Blogger and domainer)

Our co-sponsors Godaddy and Moniker are also bringing several of their top people, and we look forward to their participation in the conference, and the related dialog about the future of the industry.

DN Journal: Many remain skeptical that websites developed en masse can be of sufficient quality to attract an audience and generate a meaningful amount of revenue. How do you answer those that say “Show me the money”?  

Rob Monster: We have been pretty public about the revenue performance of the Epik-powered sites. Most Epik sites post their stats online for public view. So, we are literally, showing the money. As we introduce efficient marketplaces for buying and selling developed sites, I expect this transparency will increase. As for mass development, I think that is a misnomer. What we are actually doing is custom development using a platform-based approach. I have spent millions of dollars – mostly of my own money -- developing and validating the development methodology. 

As we saw the PPC model breaking down, and at the same time, capital markets shutting down, we believed that the next phase of domain monetization would need to be built around real development, but at a cost that would make it practical for developing large portfolios.
Consider for a moment the value proposition of building a custom Epik portal. The price is $249 per domain, and can be as little as $175 with volume. In my experience, a custom logo alone can cost that. At Epik, we build a site with custom graphics, original content, monetization and dynamic feeds -- all for $249.

DN Journal: With Epik, you have obviously placed a big bet on large scale development as a better solution than parking in the long run. Does that mean you are ruling parking out as an important revenue stream in the future?

Rob Monster: For development-grade domains, I think domain parking is a waste of time. It destroys the SEO value of domains. Sure, it may give you a pop in terms of revenue, usually because of legacy traffic or type-in. However, if the long-term plan is development, the act of parking is counter-productive. There is a place for parking, and that is for monetizing the vast number of domains that do have traffic but have questionable development value. There are simply domains that get traffic for no obvious reason, and from no homogenous audience. By all means, park those. In fact, the official conference T-shirt subtly integrates a no-parking symbol, in part because our fellow developers share our view that parking is no longer the preferred way to derive value from domain names. 

DN Journal: There are innovative people in the parking business, so I have been a bit surprised that we haven’t seen more mass development initiatives come from the parking companies themselves. NameMedia has been a notable exception with their SmartName stores platform and Parked.com, wisely I think, hedged their bets by buying WhyPark.com, allowing them to plant their feet firmly in both camps. However most of the large scale development platforms have come from new competitors. I know you don’t speak for the parking companies, but you have followed the industry closely so I wondered why you think this has been the case? 

Rob Monster: True development is not something that you just wake up one day and do. It is actually hard and encompasses a lot more than technology or securing a good ad feed. I think the parking industry got head-faked by the minisites/AEIOU attempts which did not get much traction. Those models did not work because they created static sites which the search engines quickly 

stopped ranking due to lack of original or fresh content. So if you viewed “Development” through the lens of static Wordpress sites, it would be easily to conclude that it was not worth pursuing. The parking companies are now on the wrong side of history, and it remains to be seen whether they can adjust fast enough for it to matter. 

DN Journal: I know that your personal view (and that of Epik as a company) is that the trail doesn’t end with a revenue-producing website. From the start of the cycle, you have had a strategy for cashing out in place. That is different from the way domain investors thought when parking was at its peak. The idea then was keep the domains as cash cows and enjoy the milk (PPC profits) forever. Tell us why an exit strategy has always been part of the domain life cycle you champion.

Rob Monster: Yes, that’s right. When we talk about the Domain Lifecycle, we do incorporate an exit. That exit can take many forms, including return on capital employed from cash flow, but more typically will involve a sale to an end-client who values the recurring organic traffic of a well-executed site. I believe Exits are absolutely part of the economic model of building an Epik site. From time to time, owners will get offers, particularly for their top-performing site. And while buyers may have a challenge valuing a domain name, there are well-established conventions for valuing a business. For example, a domain may have a $1,000 appraised value on the basis of its theoretical traffic from exact search and CPC. That same domain that generates $1,000 per year (~$20 per week) in cash flow, can support a 4-5X multiple to a financial buyer, and materially more to a strategic buyer.

We do know that many of our developers, including the largest developer, Kenny Hartog, have no interest in selling. They are building large portfolios of income producing properties. They are doing this in order to have sustained passive income through Epik-managed websites. The beauty of building on Epik is that the setup fee is a one-time investment. No further investment is required on the part of the owner. As a result, the owner can wait for the right offer to come along while Epik continues to add value to the Epik-powered site. 

DN Journal: One of the most interesting trends I’ve seen in the past year is the decoupling, to 

a degree at least, of domain revenue streams and their resale values. While PPC earnings have plunged, we’ve seen a rebound in the domain aftermarket this year. Why do you think that has been the case – more end user buyers who care about domains for their brand value rather than traffic, people seeing potential in other ways to monetize beyond parking (including easier development systems), or is there something else at work?

Rob Monster: I think it is fundamentally an SEO story. People who park domains are singing the blues because their type-in traffic is down and their EPC is down. What they miss is that the real value of the domain is not in the type-in traffic, but in the SEO potential. Google messed with the Parking business model but it is also offering tremendous upside if a domain owner is willing to take the next step.

As for the decoupling, I believe we are seeing a wave of entrepreneurial developers seeking out the domains that can be developed. They have seen first hand that their SEO and content work is much harder to defend than having a domain name that can pretty much give them a lock on a page 1 listing as well as a much more memorable brand name.

Rick Schwartz (center) sold Candy.com to the 
Melville Candy Company represented by Joe 
Melville
(left) and Greg Balestrieri (right).

Take a look at Candy.com, the domain that Rick Schwartz famously sold for $3 million. While we can debate whether Candy.com is the #1 place to buy candy, they are #1 on Google. That did not take them all that long and odds are good that Candy.com will be #1 on Google for a long time to come so long as their site continues to perform well.

What amazes me is that major companies like Amazon.com have no apparent SEO strategy beyond their own content. On Google, sites like IceCreamMaker.com are beating William Sonoma for ice cream maker, and Bra.net is beating Victoria’s Secret. At some point, large companies are going to look at their PPC expenses and conclude that they missed the boat when it comes to organic traffic.

My personal forecast is that in about 18 months, Epik will power 100,000 stores in a nearly equivalent 

number of category niches. Each one of these niche stores will have a passionate owner that cares about his or her site is performing. And when you consider that super-developers like Kenny Hartog alone own 1,400 of these stores, it becomes more obvious why I foresee a land rush for development.

DN Journal: One final question about the upcoming conference. When this interview is published (August 28) there will be a little over two weeks left before the conference gets underway September 15th in Seattle. I understand that the host hotel has sold out. If someone makes a late decision to attend, are they going to be able to find accommodations nearby?

Rob Monster: Thankfully there is an abundance of good hotels in Seattle. One can literally walk from one end of downtown to the other in about 15 minutes. Suggested hotels with availability include The Westin, Hotel Max, The Sheraton and The Fairmont Olympic. The Silver Cloud Inn at Lake Union is less expensive and a good choice for budget travelers. Hotel Max is offering a web special of $138 on Expedia. The Sorrento is also offering $167 rooms on Expedia and is a good option. 

If anyone is having difficulty finding a room, please contact us and we’ll be happy to help. Kristine Oliver (Kristine@epik.com) will be happy to research available rooms, though most people are having good success with Expedia. We will also continue to blog about hotel deals to the extent that we secure them.

*****

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