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Meet the first new gTLD domainer

Kevin Murphy, February 4, 2014, Domain Sales

Gary Schultheis has bought hundreds of new gTLD domain names already and plans to buy thousands more this year.

Gary SchultheisThe former venture capitalist doesn’t consider himself a domainer, but analysis of Whois records and zone files over the weekend shows he very likely spent more than anyone on Donuts’ seven newly launched gTLDs.

At one point he owned about 10% of the .guru zone.

Schultheis’ new company, ii.org, is betting big — and long-term — on being able to sell from a large a portfolio of new gTLD names, he told DI today.

Right now, his investments are concentrated on .guru, where he says he’s picked up “hundreds” of names already.

DI research shows ii.org spent roughly $30,000 on a couple dozen generic .guru names in a single day last week, including exercise.guru, medical.guru, socialmedia.guru and divorce.guru.

“We’re not from the domain industry,” Schultheis said. “Folks I’m working with are either from the financial industry or the data industry. We’re looking at this from a smart, data-driven, black-box methodology.”

Most recently, Schultheis was president of TLO.com, a company that provided background research and risk management data services. He says that’s informed his strategy with ii.org.

“I like to take vast amounts of data and make decisions based on actual data, rather than speculation and guesses,” he said. “We may buy one-offs based on news-driven events but we try not to act emotionally.”

He’d rather not talk about the specifics of the company’s algorithms, but said they were tested out to create a portfolio of .com names, with mixed results.

Flipping some of these .com names will provide operating revenue, he said, adding that he has access to potentially millions of dollars in funding due to his previous work.

“If we have some .com’s that are industry or location specific, we have enough confidence we can sell those easily for cash flow,” he said.

“Our strategy is not to buy a million dollar domain and try to sell it for two million dollars, we’re going to buy things that will turn quick or have the potential for a massive multiple in future.”

But revenue from new gTLD sales may not come for years, he said.

“We have a five-to-ten year window on these and don’t care if we don’t sell any of these for years,” he said.

With that in mind, part of the risk of investing in “premium” strings with Donuts — which has earmarked many generic words for higher renewal pricing — is the high carrying cost.

“Click traffic is not going cover the renewal costs of these name,” Schultheis said. “gun.guru is going to cost me $400 a year to carry.”

Schultheis said as a venture capitalist in the 1990s he became aware of .com names and started buying up his own. That became International Internet Inc, which was publicly listed in the late 1990s.

Schultheis said the company (from which ii.org gets its name) was worth a billion dollars at one point, though it seems to have gone out of business around the same time as the .com bubble burst.

Now, he reckons new gTLD names will start to acquire Google juice before long.

“We own computer.guru,” he said. “If you type in ‘computer’ into Google now I believe .com’s will outrank it, but I believe over time that with the Google algorithm becoming more specific when you type in ‘computer’ as it relates to an expert it’s possible we could be as strong as .com.”

Of the seven ASCII gTLDS currently on the open market, .guru is the only one ii.org has touched. Schultheis said. In future, he intends to concentrate on where he feels the big-money buyers are.

“We’re very interested in some of the city names,” he said. “But ones like .sexy and .ninja are more for a college-age person, and I don’t feel that the audience there will show the return we’re looking for.”

By contrast .guru speaks to executive types and companies with money to spend, he said.

Without naming names, he said some other gTLDs confuse him.

“With some of these TLDs we really scratch our head and say ‘What were they thinking?'” he said. “There are dozens of these things where I don’t know how they’re going to pay the bills.”

As for ii.org’s outlook, Schultheis said its portfolio is going to be a mix of assets that he thinks could be sold quick and others that are long-term plays.

“We know we’re early. Everyone wishes they could go back to early 90s and buy up all the .coms they could,” he said. “But I also own some .mobi’s so I know you can also be wrong.”