Web Masters Episode 5: Yoni Belousov

Below is a transcription of  Web Masters Episode 5: Yoni Belousov. To learn more about Web Masters and subscribe, check out the Web Masters podcast page.



Aaron Dinin:

Hey, Web Masters listeners. This is Aaron. Before getting started, I just wanted to mention that between when we recorded this episode and when we’re publishing, one of the people we discuss, a gentlemen named Uzi Nissan, passed away due to complications related to COVID-19.

Neither myself nor my guest knew Mr. Nissan. But by all accounts, he appears to have been a kind friend, a passionate entrepreneur, and a loving father. We at Web Masters send his family our well-wishes during what we’re sure is a difficult time. And even though we only briefly touch on Mr. Nissan’s story in this episode, in some very important ways he was exactly the kind of webmaster we like to feature here on the podcast.

So we encourage everyone listening to spend a bit of time Googling about Mr. Nissan’s unique life and work. It’s truly a fascinating story. And we’d like to dedicate this episode to him, his memory, and the internet freedoms he fought for. Thanks.

Yoni Belousov:

So there is always this aspect of treasure hunting, where domain investors are trying to reach these people that own these domains for a long time, and maybe their email doesn’t work, their phone number doesn’t work, and there is just no way to reach them. And whoever can, I guess there is a reward at the end of the month.

Aaron Dinin:

You just heard it Yoni Belousov Describe the process of finding someone’s contact information, their email or phone number or maybe their home address, as a treasure hunt. He’s trying to get in contact with that person because the person has something very valuable to Yoni, and he wants to buy it.

But the treasure isn’t a pile of gold, a mountain of jewels, or some precious ancient artifact. That person whose contact information Yoni is trying to track down owns a domain name, those things you sometimes type into the little bar at the top of your internet browser, https://google.com, https://facebook.com, https://amazon.com.

Let’s be honest. You probably don’t even type all of that in. You probably just start typing the name of a company and your browser auto-fills the rest. Or forget typing a domain name, you might just open the company’s app on your phone. Behind all those company names and phone apps are domain names. Domain names are very simple, just a few characters of text, but some of them are incredibly valuable.

Yoni Belousov:

Let’s use somebody like Apple. Apple, they own apple.com. How expensive would it be for them to not own apple.com? Do you know? So a domain name is like a catalyst from a marketing perspective. So in other words, if you have an Apple ad, you have the domain name apple.com. Everybody knows where it is, and they go to the domain name. What if they had apple.net?

Apple.com will probably get a lot of traffic away from the .net. Or maybe if they used applecomputers.com or applephones.com, that would put them at quite a disadvantage. It’s almost like domain names from the company’s perspective are almost like brand recognition. They must have it because otherwise the consequences for not having the correct one ends up being expensive, really.

Aaron Dinin:

Yoni isn’t exaggerating. And we know that because there are some well-known major companies that don’t own their domain names. And it’s a huge problem for them. For example, if you’ve ever been browsing cars online and curious to find out what kinds of new SUV’s Nissan has, you might’ve stumbled across nissan.com. But nissan.com is not going to take you to the car company’s website. Instead, nissan.com is owned by a gentleman named Uzi Nissan. He bought the domain nissan.com in June of 1994 to serve as the online home for his computer business. Since then Nissan, the car company, has been claiming trademark infringement on Nissan, the computer company. They’ve even filed multiple lawsuits against Mr. Nissan worth millions of dollars, but none of them have been successful. In the meantime, not owning the domain name nissan.com is likely costing Nissan, the car company, enormous amounts of money every year.

Yoni Belousov:

In that situation, it probably cost Nissan maybe a $100 million just opportunity costs because people go to it. Let’s say I wanted to buy a Nissan. I go to nissan.com. I’m like, okay, I don’t know what this is. This is confusing. It’s not what I was looking for. And then I’m like, you know what? I’ll deal with it later. And you’re always going to be closing. So if I’m gone, I’m gone. Maybe I’ll come back, maybe not.

If you calculate the inefficiency just in that piece of it, it’s already extremely valuable for Nissan. And it’s very unfortunate that they didn’t buy it because they’re probably continually losing more and more just due to that.

Aaron Dinin:

And why should we trust Yoni that Nissan has lost hundreds of millions of dollars in opportunity costs just by not owning nissan.com? Well, Yoni owns thousands upon thousands of domain names. In fact, Yoni is one of the largest private domain owners in the world. Are you ready to hear his story? All right. Let’s get dialed in.

Aaron Dinin:

Hi, you’re listening to Web Masters. This is the podcast where we hear stories from people who have helped shape the underlying business infrastructure of the Internet. Despite not being household names, these people and their efforts, their passion, their dedication, and let’s be honest, sometimes their dumb luck, have had an enormous impact on everything we see and do online, which is an awful lot.

I’m Aaron Dinin your host. Back in another life, I was an internet entrepreneur, too. Now I teach entrepreneurship at Duke University. And as part of that work or scholarship or a morbid curiosity or whatever you want to call it, I enjoy learning about the history of the Internet, which is why these podcasts exist.

Today’s guest, Yoni Belousov, describes himself as a domain investor. It’s a profession that from my experience, most people don’t even realize exists. So I think his story is going to interest a lot of people. And you know what also interest a lot of people, the company sponsoring this podcast that I want to make sure I thank before we start hearing Yoni’s story. That company is Latona’s, a boutique mergers and acquisitions company, specializing in cashflow positive internet assets, like websites, e-commerce stores, Amazon FBAs, SAS products and, like we’re going to discuss today, monetizeable domain portfolios.

So if after listening to today’s episode, you find yourself thinking, hey, how do I dive head first into domain investing, Latona’s might have something for you. Or maybe you’ve got yourself a nice pile of domains and you want to sell them, Latona’s could be a good place for that as well, or really they can help you sell any kind of internet business, just head on over to latonas.com. That’s L-A-T-O-N-A-S.com, which by the way, is an example of a domain name. And that brings us back to Yoni, who’s going to start by giving us a little more detail about what a domain name actually is.

Yoni Belousov:

So a domain name is really a reserved address on the web. And domain names, at least at the current stages, are necessary really for the web to operate. Just to be able to send an email, you require an email address, and it’s effectively impossible for an email address to work without the domain name. So as far as the web goes, a domain name becomes almost like land in comparison to real estate. It’s just an empty lot. You can build a building on it, which would be, I guess, a website equivalent. But you cannot have a building without a lot.

Aaron Dinin:

Okay. So a domain name is like a piece of real estate. So is that why we call it a web address?

Yoni Belousov:

Correct. So IP address is a set of numbers that correlates to a destination on the Internet. So effectively, this would usually be a server, as far as the day-to-day usage of an IP address for the normal person. A domain name is kind of like a layer on top of that because, obviously it would be easier to remember, let’s say allen.com rather than 256.126 point something else and so on.

Aaron Dinin:

Let me give a bit more detail here, just for the sake of clarity. Basically, every server connected to the Internet anywhere in the world gets assigned an IP address. If you don’t think that’s important, just remember that anytime you pull up your email, that email is being stored on a server somewhere. When you upload a picture to Instagram, you’re really uploading it to a server somewhere. And when you binge your favorite show on Netflix, that show is being sent to you from a server somewhere.

All those servers require IP addresses. So when you type Carpool Karaoke into your YouTube search bar, the magical little elves that run the Internet know where to go look for the content. Just kidding. Everyone knows that gnomes are responsible for making the Internet work, not elves. Anyway, IP addresses are usually a long string of numbers and dots, the kinds of things computers love, but humans stink at remembering.

For example, if I tell you to go check out 104.239.140.204, you’re not going to remember that. But when I tell you to go check out latonas.com, just like I did back at the top of this episode, that was much easier to remember, right? You’re starting to see why domain names are so valuable. And here’s the thing, once you own a domain name, nobody else in the entire world can own that domain name. It’s yours. And that’s the underlying reason behind why domains can be valuable. Yoni recognized this value early in his career before lots of other people did. And that gave him a headstart for investing in domains and creating the foundation of cashflow he’d eventually use to acquire more.

Yoni Belousov:

My family moved from Russia to Israel when I was four years old. My family moved from Israel to Canada when I was 13. I had a big culture shock. The situation in school was very different. And I didn’t have that much social interaction at the beginning, and I ran across the Internet. So I spent a lot of my time there, mainly just playing games. But at some point I was like, hey, some people are making money online. So I tried to figure out some ways to do it.

And back then, it was much harder than now because the Internet wasn’t really a commercial thing. This was something that people would just go to check their email and check the news, and that was pretty much it. And I tried different things online. Somehow domains stuck for me because it seemed both interesting to me, but also something that was valuable and the value was not realized by everyone.

Because to me, it seemed obvious that it’s valuable for many different reasons. Let’s say when you count dot coms only, there is over a hundred million registered. And out of that, personally, I would say maybe only 5% have any value. Just because it exists, it doesn’t mean it has value. There are just so many variations. Think about somebody you know, their first name and last name. Unless these names happen to be extremely common, if they had the dotcom version of their name, it’s probably not valuable. But if they had, let’s say, something like mike.com, that would be a very valuable name.

Aaron Dinin:

I can appreciate that. If my name were Mike, then mike.com would be valuable or if we’re launching a company called Apple that we’d want to own apple.com. But when you were getting interested in domains, how else were they valuable beyond just being some person or company’s name?

Yoni Belousov:

Back then, there was a lot of type-in traffic. People would just type in the domain name, and you would have this traffic coming in every day that you can convert to revenue for monetization. So effectively buying a domain was almost like buying a property and the traffic was rent.

Aaron Dinin:

What Yoni just described right there was the underlying opportunity in domain names back in the earlier days of the Internet. Yes, some small portion of domain names have value simply because they’re unique and associated with a big brand. But other domains were valuable because they naturally generated traffic since the names themselves meant something.

Remember this was back in the days before Google knew so much about you, it could predict your searches. So people looking for say, watches, would literally go into the URL box on the top of a web browser, type watches, and that would take them to watches.com. If you owned watches.com, it meant you got free traffic to your website. And a lot of that traffic was presumably people looking to buy watches, meaning it was super high quality traffic. This is called type-in traffic. And in the early days of the Internet, people built huge businesses around it. Yoni was one of them. But as is usually the case, all good things come to an end.

Yoni Belousov:

When the economy started crashing, the advertising field also started crashing and also Google started squeezing. They had the majority control over the domain industry because that was the main monetizing platform, really. So the revenue from ads on domain names went down a lot. I didn’t even know what it would be, maybe 90% from 2007 to 2012. Pretty much, I saw that this business is not going to last forever.

So then I switched and in a way, it’s a completely different business, but it’s very close, and that’s domain name sales. So instead of just monetizing through ads, they started monetizing by effectively moving a chunk of their portfolio, like churning it almost on a consistent basis. And from that point on, at this point in time, that’s my biggest business, the domain name sales.

Aaron Dinin:

And that’s what Yoni does now. He started as a traffic guy, someone who had access to lots of traffic thanks to his huge portfolio of domains that organically generated lots of visitors to his web properties. He’d monetize on this traffic through affiliate offers where he’d get paid by other people to send on his traffic.

But when that business died down, he began looking for domains that would become more valuable over time. In that sense, it’s like buying stocks. Yoni looks for domain names that are undervalued or he thinks will grow in value over time, tries to buy them cheap, waits for them to increase in value and then sells them. Sounds kind of easy, right? You can read the news, look for things that are starting to grow in popularity, maybe a new celebrity or a new fashion trend. Then go buy domains at a registrar like GoDaddy, and it’ll cost you what 10 bucks. And that right there is going to be your ticket to obscene wealth, but maybe not so fast.

Yoni Belousov:

It is possible to acquire names that are going to be valuable in the future. Now, the thing is, this is an extremely competitive business. So I would call it extremely unlikely that I would call that exercise a useless exercise because the net effect would probably be negative because there’s just so many other people doing this.

But when the domain name is available for registration, this is almost like a crowdsourced way for everybody in the world to tell you, well, nobody was willing to pay $10 for it. So the fact that you think it’s worth more or going to be worth more, that’s quite a ballsy move.

Aaron Dinin:

Okay. So then how do you acquire valuable domain names? Will you let us in on the secret?

Yoni Belousov:

So usually, actually I acquired them through liquidation marketplaces. At this point in time, that would probably be my most common way. So really there is multiple sources online. So one of them is GoDaddy Auctions. Another one’s called NameJet. Another one is called DropCatch. And all of those, they have their own almost angle on the liquidation marketplace, which usually involves expired domain names.

So you can see what’s available, what’s dropping soon, and then enter those auctions. This is just one way to acquire names. Another way, which is by far more difficult, is really trying to reach out to the owner that owns them and acquire it directly from the owner. Now, the reason this is more difficult is because this is also very competitive part of the industry. There’s lots of people that effectively shoot out an email to an owner of a domain name to see if they’re interested in selling domain name. Somebody might be not interested in selling for 10 years in a row.

And then suddenly one day, that person maybe is experiencing financial difficulties or whatever the situation. And suddenly, the domain name becomes for sale effectively for the next person that contacts them. So there are opportunities. People are doing their own private investigating to find out who this person is and whether they would want to sell the domain name. Because a lot of times, you can find an email address and you can shoot an email there. But if you don’t get a response, you don’t get a response. So there is lots of sophisticated methods being involved here in terms of finding people and trying to see if they’re interested in selling.

Aaron Dinin:

I like how Yoni used the phrase private investigating and sophisticated methods. I’m pretty sure the rest of the world would call it stalking. But, hey, I guess that’s just par for the course when it comes to entrepreneurship, lots of things that normal polite society might call rude, inconsiderate, or even dangerous, well, entrepreneurs call it hustling. As for Yoni, he’s great at hustling up valuable domain names. And it comes from years of experience figuring out what makes certain domains worth more than others.

Yoni Belousov:

There’s many things that would make a domain valuable. To be fair, I don’t know if this always excites me, I guess, even if domain name is perfect because that’s what everybody else sees as well. All that means that this is the level that you’re competing at. If it’s a one word dot come, they’re easy to spell, short. Perhaps it has meaning in multiple languages.

There is many ways to quantify things about the domain names. How many other companies use type of word? Let’s say, if we’re talking about something like blue.com. So blue.com would be an extremely, extremely valuable domain name. And there is many companies that call themselves either blue or blue something. And hence, this would be, I guess, a very good domain name to hold indefinitely, so to speak, because the sales rate is quite low in this industry.

Aaron Dinin:

So you’re saying those are all common things people look for when evaluating domain names, which means those kinds of domains don’t come on the market often. And when they do, there’s probably lots of competition for them. And how do you compete in the market? Are you willing to share any tips or tricks about the kinds of things you’re specifically looking for?

Yoni Belousov:

So for me, what I’m interested in mainly is actually how often this domain is used in other business names and other registration patterns. And say it’s something like blueelephant.com versus yellowelephant.com. Both of those I’m a hundred percent guaranteed to you are taken because there is a specific niche of names that people like because it’s very brandable. And I like to see names that are taken in other extensions.

I like to see names that are taken that there are other variations of those names taken. If I’m going for blueelephant.com, there’s probably a lot of companies that are called something like Blue Elephant Furniture or Blue Elephant Nursery. I don’t know, there’s going to be tons of variations. So even though those ones use dot com, it’s still an indicator of how many of them there are and what category and to what extent they’re using it. Those are positive indicators.

For me personally, I like to see names with the most positive indicators and compare it to price. There could be a name that has the absolute best positive indicators and everything, but somebody else assigns, understandably, very high valuation for it. And then I can’t outbid them in an auction. That would be an unfortunate scenario, but this is what, in a way, a lot of other domain investors are also looking at.

Aaron Dinin:

Are there any gotchas or red flags or things you really try to stay away from?

Yoni Belousov:

One main thing that you want to stay away from is trademarks, something like Panasonic or Google. In a way, they’re obvious. But some trademarks are not as obvious. A name might sound good, austinrealtor.com, so it seems like it will be a pretty good name for a realtor in Austin. But the keyword realtor is actually a trademark term that’s actually this odd trademark. Personally, I just wouldn’t even want to get into bidding on it. That’s when I want to stay away.

Aaron Dinin:

That brings up an interesting point I’m dying to ask you about. As an entrepreneur, I’ve spent more hours than I’m proud of searching for the perfect domain to pair with a new company. So many times I think I come up with that amazing domain only discover is taken by someone like you. The term I’ve heard used is domain squatting. What do you say to that? How do you feel about being called a domain squatter?

Yoni Belousov:

So domain squatting is actually specifically trademark related. So domain squatting is actually only when you’re squatting on a domain name that contains somebody else’s trademark, not on the generic name on a domain name that has no other use besides the trademark meaning of it. Now, does somebody who own more than just their own apartment or their own house, is that a housing squatter? That would be pretty much the same comparison. A squatter in this situation would be somebody who does trademark infringement in bulk per se. Whereas an investor is somebody who just concentrates on the generic side of the domain name industry.

Aaron Dinin:

Okay. I guess from now on, instead of complaining about domain squatters, I’m going to complain about domain investors. But if I’m being honest, it’s really because I’m jealous. How amazing would it be to own this tiny little string of characters that can become worth five, six, even seven figures if just hold onto it for long enough? It’s basically the dream of every entrepreneur, right? It’s the mythical creature we all like to call passive income.

Yoni Belousov:

If you want passive income, the best thing I can really recommended is something like stocks. Domain names are only passive if you do a good job managing them. In this business, you have to be really consistent in terms of practices and the routines and concentrating on quality names so you don’t continually renew and buy bad names. So there is a passive aspect for it, but only if you make good system around it. Otherwise, it’s not passive. In fact, I know many other domain investors that spend 60 hours a week, 80 hours a week working.

Aaron Dinin:

Well, it sounds like being a domain investor isn’t going to be my easy ticket to success. And it’s probably not going to be yours either. The truth is domain investing is a highly specialized and highly niche industry that takes tons of work in tons of scale. That doesn’t make it any less fascinating. In fact, it’s yet another reason I think stories like Yoni’s need to be told. There’s this enormous world of entrepreneurs monetizing the Internet in ways most people don’t even realize exists. At the same time, decisions someone like Yoni is making for his business are impacting the ways that millions of people move around the Internet. When you stop to think about it, it’s kind of crazy. And it’s ridiculously impressive that he started building all of that when he was just a teenager. I hope you also think learning about it as kind of fun.

Aaron Dinin:

And that’s why you’re going to subscribe to Webmasters. If you haven’t already, go do that now before you forget on whatever your favorite podcasting app happens to be. And while you’re there, maybe give us a glowing review. Those positive reviews are what help make other people find us. And having lots of people listen, encourages us to keep making more. So you see, it’s really in your best interest, right?

I’d like to thank Yoni Belousov for sharing his story with us.

And thank you to Ryan Higgs, our audio engineer.

If you’re interested in getting more from Webmasters between episodes, follow us on Twitter @webmasterspod. You can also follow me. I’m @AaronDinin. That’s A-A-R-O-N D-I-N-I-N. Also I published lots of articles about entrepreneurship that you can read at IP address 104.16.120.127. If you can’t remember those numbers, luckily you can just type medium.com into your web browser, and that’ll get you to my content as well. Once you’re on Medium, search for my name and you’ll find more insightful commentary and witty humor, just like my terrible, terrible IP address joke.

I’m sorry. I will stop now. Until next time, it’s time for me to sign off.

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