By Ron Jackson
Editor/Publisher    Archived March 3, 2004

Domain King or Royal Pain? Stick around long enough and you will hear Rick Schwartz described both ways, depending on whom you ask. There seems to be no middle ground when it comes to the 50-year-old domain pioneer from Boca Raton, Florida. People either love him or hate him. The only ones still undecided are those who have never heard of him (if you fall into that category, we urge you to consider moving to a locale with electricity and running water).   

Let's start with the Domain King premise. Schwartz anointed himself and annoyed his critics by claiming that title in the mid-90s. Does he have a rightful claim to the throne? Well, he did start in the domain business with a total investment of $1,800 and wound up earning $20 million over the next 8 years, so you decide. There may be others in his class, but you won't need one of those Disney World cattle pens to control the line.  

Rick Schwartz

OK, how about Royal Pain? This one is a little harder to get a handle on. Certainly there is no shortage of critics. Any time Schwartz's name comes up in a domain forum, the detractors are out in force. While the pro-Schwartz side can point to numbers to support their argument with rifle-like precision the detractors take more or a shotgun approach. They have called him a tyrant, an egomaniac and a pornographer and they will tell you that those are his good points.

When there are such extremes of opinion the truth usually lies somewhere in the middle and perhaps that is the case here. In any case Schwartz's accomplishments cannot be wished away by critics and there are just as many who swear by him as swear at him. Whether you wish him well or wish him the worst, you have to be fascinated by what makes a guy like this tick and that is what we set out to learn.

Rick Schwartz purchased his first domain name in December 1995 when he paid $100 for LipService.com. Eight years later to the month he sold one, Men.com, for  $1.32 million in a deal that was reported worldwide. A lot happened to shape the Schwartz legend in the eight years between those events, but to understand him you have to look further back than the past decade.

Schwartz was born in New Jersey but didn't stick around long enough to call the Garden State home. His dad Hy (who passed away in 1997) had left a government job and taken a private position that required  the family to make frequent moves. By the time he had graduated from high school, Schwartz had lived in 6 different states and gone to 10 different schools, including two separate high schools his senior year!

Schwartz admits that he hated school and was not a good student, especially after 8th grade when he had to deal continually with new surroundings, different teachers, varying standards and levels of learning.  He would have quit if he could, but being a junior high dropout is frowned upon by parents and potential employers alike. So Schwartz persevered and even went on to community college in California for 18 months before turning in his book bag once and for all in the early 70s.

A lot of kids with ambition but limited formal education find their best chance at big money is in sales. Schwartz tried it and found that he loved it just as much as he had hated school. He became a manufacturrer's representative then advanced to national sales manager for two furniture companies. They kept him busy running from one end of the country to the other for the next ten years.

By the end of that run Schwartz had come to the realization that his efforts were producing millions of dollars for someone else. In 1984, he decided it was time to look out for #1. Schwartz opened his own business that year and promptly developed a thriving trade in products ranging from advertising blimps to industrial lighting. He lived on the road, doing one trade show after another, but that came to an end five years later when a ruptured disc kept him home for good.

Schwartz adapted by using ads in trade magazines instead of trade shows to sell goods he was importing from Mainland China, Hong Kong, Taipei, South Korea and other Asian locales. Once a year he would satisfy his innate wanderlust by going to see his suppliers in person, but for the most part he had to be content with life in front of a computer screen.

From that vantage point, Schwartz was one of the first to begin surfing the Internet. He quickly realized he could put his sales brochure online and save a ton of money in advertising costs alone. �The website paid for itself from day one," Schwartz said. "The savings in postage alone was amazing since we had been paying $2 each to send out dozens of brochures every day. I was convinced that the Internet was the greatest sales tool ever invented!"

Schwartz started studying other ways the web could be used to turn a profit. "I discovered that domains were the back door to a land of dreams. I learned how to FTP (move files back and forth over the net through File Transfer Protocol) and that was the day my life changed!" Schwartz declared.

He was one of the very first people to see that domains had the same potential in cyberspace that real estate had in the real world. He took that initial $1800 nest egg and started plowing the money into domain names even though his friends questioned his sanity for doing so. In hindsight it is amazing that everyone else missed what Schwartz saw. Schwartz said, "I think it was just too simple. It�s like not seeing the forest for the trees. When I think that I competed with 6 billion other people that had the same opportunity, at the same time and they all missed it...well that gives me fuel to do even more. It is the ultimate satisfaction!"

The kid from California used good old common sense to trump all of those corporate guys with their advanced degrees combined. "They blew it�that�s the short of it,"  Schwartz said. "They failed to recognize the single biggest bonanza since the gold rush over 100 years ago. They failed to recognize it was time sensitive so they had no sense of urgency to act."

Schwartz on the other hand did recognize there was no time to waste and it led to many a sleepless night. "This was a unique opportunity in time that I knew would never come again," he said. "I only slept when I could go on no longer, or my hands would hurt too much, or I collapsed on the computer! I understood I did not have the luxury of time and I KNEW I was missing domains by SECONDS!"  

While Schwartz piled up domains, his friends became more concerned about him. In August 1997, he spent $42,000 to buy porno.com, even though the seller had just acquired it a week earlier for $5,000.  Surely he had gone crazy! But even at 42K the domain turned out to be a bargain. "What surprised them and was impossible to keep secret was porno.com earned enough to pay for itself in just a few weeks! They discovered that it was akin to buying real world property and paying off the mortgage not in 30 years but in 30 days!" Schwartz said. 

And so the race was on as dozens of others entered the fray. To fend off the competition, Schwartz sold his home based sales business for seven figures in March 1998 and concentrated all of his time on the Internet. Schwartz continued to acquire adult-oriented domains (a source of high profits but also the root of much of the criticism leveled at him today) but also landed some amazing mainstream gems, including Candy.com and Men.com, the million dollar baby he originally acquired for just $15,000. 

Many don�t realize that Men.com was only the third domain Schwartz has ever let go. One of the others was eScore.com. He took a $100,000 offer for that domain from the Stanley Kaplan test preparation company so he could pay cash for a Florida condominium for his mom. When you listen to Schwartz talk in his usual brash manner, it might come as a surprise that it was not Muhammad Ali, but his mother who was among the biggest influences on him. 

"I actually learned and was influenced by everyone I have ever worked with, called on or met. Each person has gifts of knowledge and special traits and each had sides I wanted to avoid. I took the best attribute from every person I encountered and I continue to do that. Then I add to that the total unwavering integrity that my dad had and the spirit, class and warmth my mother has and there you find what I am constituted from. That�s why my standards are so high and I am allergic to B.S."

Critics claim Schwartz is all bluster, but he is all bottom line when it comes to making purchase decisions. "When domains started taking more than 5 years to pay for themselves (via revenue from traffic), I decided these domains were too risky and other investments were beginning to be more attractive," Schwartz said. "Today the prices have moved up while the quality has gone down. In many cases it is just no longer a value because there is no way to calculate when or if you will get a return. I buy as an investment not as a gamble."

While Schwartz remains amazed at the opportunities others missed in the mid-90s he is even more stunned that so many people still don�t recognize traffic as the internet�s Holy Grail. "Here it is almost 10 years later and of the 6 billion on the planet, there are still only a few hundred that actually understand the science of it today," Schwartz said. 

"The Internet is the greatest salesman of all time and premium domains with targeted traffic is your guarantee that you will have a constant flow of qualified customers for as long as you want." Schwartz added "the business world missed this opportunity TWICE. The first time was for the domain itself as virtual real estate. But even worse was when the big websites then started buying advertising on TV and in magazines. They got small short term gains while an opportunity to get long term results was IGNORED!" 

"For what little they received from their multi-million dollar 30 second commercials they would have been much better off buying domains. That�s like buying a commercial on TV that runs every day forever with no additional charges." Schwartz said "inexcusable is the only word that comes to mind - the know nothings blew tens of millions on wasteful advertising when the opportunity was sitting right in front of them!"  

By now you may be getting the idea that Schwartz see little sign of intelligent life in corporate America. He has much more to say on that subject on his frequently visited eRealEstate.com website. As you browse through the site, most of which was written in 1997, you can�t help but be struck by how many of the things Schwartz predicted came true. Notable examples include his conviction that impression based advertising would prove to be a waste of money and that millions of people would lose their savings investing in stocks of some of the early Internet companies. It will be interesting to see if he is equally prescient about what he is predicting for the years ahead. 

"Over the next few years the masses will learn what we discovered 9 years ago," Schwartz said. "It took TV more than 20 years to mature and over 50 years to get where it is now. The Internet will surpass all accomplishments of TV and add several new dimensions." 

"Business will start to take the net more seriously. They will educate themselves to understand that traffic is the fuel that runs the net. A domain with traffic is like a perpetual base of fresh new customers every single day, forever. If it isn�t already, domains will become the hottest commodity in the world and everyone will want a piece of the action. Schwartz added �I also think that you will start to see a consolidation in pay per click companies after a war between them that will drive prices up and weak ones out."

Though the golden opportunities of the mid-90�s are gone, Schwartz thinks the web�s future is so bright that people can still make outstanding returns with domains. "It is still possible to do well IF you know what to look for and IF you work smart. It is much harder now, but it is still doable. There are still many quality domains for $50-$500. However that window of opportunity closes a little bit more with every passing minute of every passing day." 

Schwartz went on to say "it also depends on what part of the domain business you want to participate in. If you just come in to buy and sell there may be more opportunity. I focus on domains that can earn enough to support themselves and then to return a profit. Today it is still about traffic and type-ins. I have over 4,300 domain names and combined they get anywhere from 95,000 to 115,000 daily visitors all by way of type ins. I see it as buying oil wells. It is just as easy to buy oil wells that pump oil as ones that don�t. The ones that pump have less risk and higher rewards," Schwartz said. 

"Working smarter and not harder and making more revenues in a shorter amount of time are the keys to wealth. The sooner someone learns this the wealthier they will get. You get a good portfolio one domain at a time and there is no other way. One foot in front of the other will always get you where you want to go. Those that skip steps on a ladder always fall down, waste time, fall behind and are constantly starting over again with nothing to show for their efforts. The only shortcut is working smart and realizing there are no shortcuts," Schwartz said. 

Prices of the best .coms have escalated beyond the reach of most entering the domain business today. As a result, some are placing their bets on the new ICANN approved global TLDs, .info and .biz as well as some of the better know country codes, like .US.

Asked if those early investors might reap significant benefits just as he did with his early investments in .com Schwartz said "Probably not but it will depend on one thing and one thing only. If you see .whatever advertised on TV and then you begin to see other .whatevers advertise on TV and billboards and magazines, THEN and only then will there be a CHANCE for other extensions to become meaningful." 

Schwartz continued "If you added up all advertising money spent on promoting .com around the world it would be in the hundreds of billions of dollars. If you added all the .whatever advertising together, it would be insignificant. It is a .com world because all the brands you know, use and trust all have .com addresses and I don�t see them changing at any point in time."

Still, Schwartz thinks the new extensions are a better bet than one old-timer, .net.  ".org is the #2 extension because of its widespread use with charities and heavy TV and print advertising. .net is the orphan. It has no identity and loses massive amounts of traffic automatically to the .com counterpart. Not basing your business on a .net extension is the #1 piece of advice I would give anyone that asked. I would choose .whatever over ANY .net unless you own the .com version. If you promote .net, and don�t own the .com, you are likely working hard for someone else and wasting 15%-25% or more of your hard work and marketing efforts. It is the single biggest mistake one can make on the Internet."

Schwartz recognizes that "it is statements like that where folks either totally agree with me or hate me for saying it. But it is FACT and the more the fact is shown the greater the hate grows. Having a .net to base your business on is like building a boat with a BIG gaping hole in it. What does it say about the boat owner/builder that gets angry when you point out that HUGE LEAK?"

Schwartz added "As the net matures it is possible for a .info or .TV or .biz extension to flourish. There are many factors involved and that is a gamble as opposed to buying a .com with traffic and being able to calculate when you will get a return. The one piece of advice I would give for any .whatever extension is buy only PRIME one or two word domains and be prepared to lose every penny you have in it. I hope the ones that do go after other extensions prove me wrong someday."

Since Schwartz has already accumulated so many prime properties he is focused more today on developing what he has and, as with his approach to many other aspects of life, he is a maverick in that area too. "I like to build sites with limited content. In other words, I have mostly crappy sites! But even that is for a reason. I don't want anyone sticking around on my sites. I want them off as quick as they came via a revenue producing link."

Another reason Schwartz spends more time on development today is the change in the way expiring domains are sold. He actually likes current methods, but not the madness. "I like the auction system for drops but I usually don't grab many because they have become overpriced to the point it makes no sense," Schwartz said. "When I buy a domain I can give you a pretty close estimate of EXACTLY when that domain will pay for itself. 1, 2, 3, 5 years. On most drops, unless they resell the domain, a return is not able to be calculated. You may never get a return and then you cross the line where an investment becomes a gamble." 

By this point you might be saying to yourself, "Hey, this guy doesn�t sound like the raving lunatic I was expecting!" This brings us to what makes Schwartz a real paradox. How come a guy who is this sharp and who has been this successful is still the object of scorn from so many. Schwartz has one explanation. "I am not one to tell others what they want to hear. If I did, I would make loads more friends, but then I would be a phony and no real value to anybody. Nobody should ask me a question if they don't want an honest answer. Honesty gets you respect from some and anger from others."

Schwartz continued, "Some also have a problem with me owning adult domains but I think they just object to my success, since I don't have any adult content on ANY of my sites. It's one thing to own and run a strip bar. It�s another thing to lease property to someone that has a strip bar. If 55 hotel guests charter a bus to go to a strip bar would these people criticize the hotel they came from? How about the bus company that transported them there? Are these same folks upset when their kids hear whore and slut and bitch all day long on NBC, CBS and ABC? What am I doing that they are not?"   

Schwartz concluded, "what I do is legal and moral, what some others in the business do is illegal. Like hijacking domains, extortion, stealing content and worse. We can call them crooks because that is exactly what they are. Then we have the infringers that try and extort money from companies and that practice gives us all a bad name. They are the true cyber squatters that have soiled all our good names and had us all painted with the same brush as they are." 

Schwartz believes that "making statements like that makes me an unpopular guy among every infringer, cyber squatter, hijacker and every other wrong doer. There is a small but vocal group that never misses an opportunity to say something nasty or make some crap up about me. So when you hear the attacks, look a little deeper and you usually find a motive."

Though people take frequent jabs at Schwartz there is an equal number that would gladly take a punch FOR him. Monte Cahn, CEO of Moniker.com (the high-security company that handles Schwartz� domain portfolio) told Domain Name Journal "Rick has earned the respect of others by following through with his commitments and leading by example.  He has been willing to share his vision and teach others. By letting others in on the big domain opportunity, the whole concept becomes reality rather than one man's crazy idea that a domain name would be worth millions one day." 

Cahn added "Rick is all about sharing opportunities so that everyone gains. I consider him the Warren Buffett of the domain name market - sticking to a philosophy both short and long term because it works - he meets every definition of being pragmatic." 

Cahn has a comment about the critics too. "There are many jealous of Rick and what he has created for himself and the others that he has shared his success with.  Rick tries to surround himself with people that have a great deal of integrity, forward thinking ideas and knowledge. Those excluded from this elite group dislike the fact that they are not included and spend much of their time wasting time by trying to bash and discredit him and the Board he has created," Cahn said. 

The Board is a private forum Schwartz runs for domain associates. Some have been unable to get in and others who have gotten in have been booted out. Some of these people have turned their anger toward Schwartz as a result. "The only way to get in is by recommendation and acceptance of our committee." Schwartz said. "So people that are not known, have bad reputations or unsavory business practices are rejected as board members share their past experiences with new applicants. Some people were on the board and didn�t play well with others so their passwords were deleted."  

Schwartz added, "I have shared my findings with whoever would listen. I asked nothing in return. Those that did listen to what I have learned made a ton of money, transformed their lives and appreciate that I was generous with my time and ideas." Gordon Martin of DropWizard.com is one of many who backs Schwartz up on that point. "I've literally had a million dollar net education given to me free," Martin said. "I can't thank Rick enough for including me on his board as I was a complete neophyte in net terms." 

Schwartz also sees a lot of the criticism as simply being the underside of human nature. "Many are just jealous or don't like when others succeed or have to rip others down to try to build themselves up. They don't like me but can't give you a real reason. I think it is called ignorance. They walk east looking for a sunset and when you tell them it is the other way they attack instead of stopping to think and consider. As they continue to walk east they become more and more bitter and angry."

Schwartz sums up his philosophy by saying, "I just believe there is RESULTS and there is everything else. I don't just talk about results I have shown results over and over again through the years. At the end of the day, I run one of the single most efficient businesses on the planet. Say what they want, nobody can argue with numbers."

In one last salvo, Schwartz noted "While this sector was being ignored I quietly built a multi-million dollar business with no employees and an annual overhead of less than $50,000 and declining! I run the entire empire from a 7-pound laptop and wake up with absolutely no job to do other than what I decide to CREATE for the day. This all grew from an $1,800 investment in 18 domains. Then, using only the funds generated from those domains, I was able to grow the business from the ground up without outside investors or any of my own money. Now that�s a story that needs to be told!"

* * * * *

Editor�s Note: For those who would like to comment on this story, we invite you to make use of our Letters to the Editor feature (write to [email protected]).

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

Tough Name to Live Up To: Is An Australian Registrar's Claim to Be Fabulous Fact or Fiction? 

 

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