Monday, December 2, 2019

The .Org Fire Sale: How it sold for less than half its valuation

The .Org Fire Sale: How it sold for less than half its valuation

Part 2 in a series.  (See also Part 1: The Great Dot Org Heist.)

Ethos Capital seems on track to complete their takeover of .org early next year. ICANN claims it is powerless to stop the acquisition. ISOC president Andrew Sullivan suggested nothing but a court order would make ISOC change their minds. (To that end, optimists can write to the state DA, who still has to approve the sale.)

Sullivan also reported in his latest public letter that the acquisition was for $1.135B. This seems to be well below the market value of .org, even if the buyer doesn’t reconsider bolder price hikes.  Lance Wiggs estimates this undervalued the registry by $1B-10B, depending on how creatively it is managed, and that the investors are taking almost no risk for a chance at a 5x return.

Sullivan also shared many conflicting thoughts in an interview with the Register: he thinks not many people care about the sale; public pushback has been strong; and the sale would not have happened if there had been a public discussion first.  His presentation of the offer to the ISOC Board also highlighted a need for speed and secrecy, and details have been redacted from the board’s minutes.

How to monetize .org if you must

Once the takeover is completed, there will be no constraints on Ethos short of people talking with their feet.  They offered to try to limit price hikes to an average of 10%, but that’s a voluntary semi-commitment with no enfocrement. The cost of switching domains for established organizations is large, so they can experiment boldly without harming their new plaything. So what might they do?

  • Maintain a 10% annual increase for domains with the least demand.  Nice work.
  • Take a page from the Donuts book: create multiple price tiers for popular domains, up to 100x the base rate.
    • Raise rates for long-time owners of common words. They weren’t using that premium space anyway.
  • Open up their own registrar and start undercutting competition.
    • Encourage current holders to renew for 10 years, to soften the blow of price hikes. This will raise cash up front to offset the cost of the acquisition.
  • Float a merge with Donuts.  .org is more valuable in such a combination, saving on overhead and analysis, raising the optimal price floor for other TLDs when .org prices rise.
  • Use data about .org owners and purchases to cross-sell, and coordinate bulk deals for brands across scores of domains
    • Package and sell data about domain holders to third parties

Managing an ISOC endowment

Meanwhile, ISOC will have $1.135B in a new endowment to look after.  Their Board minutes suggest they may stand up a new entity, the “Connected Giving Foundation”, to invest the fund with guidance from Goldman Sachs, who financially brokered the acquisition.

Sullivan suggested that this would return roughly the same annual revenue as they had been getting from PIR — around $50M — but without the possibility of expanding the underlying business year by year.




No Comments so far Leave a comment Leave a comment

Line and paragraph breaks automatic, e-mail address never displayed,



<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

from Hacker News

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.