Business.com - Sold for $350 million

**petrosc** · 07-27-2007, 10:27 AM

I think I will agree with Francois. We all agree on the fact that a generic name of this magnitude will most certainly help boost any business, but at the end, what matters is the marketing and branding. Yes the domain helps a lot, but it's the active marketing that makes a business popular and in extension successful. The type-ins from the term itself is a very small fraction of the actual amount of visitors. We know of many examples of successful online businesses that use fictional terms as domain names, and yet they branded them to an extent where the amount of visitors they receive is multiple times larger than the amount the generic domains get.

examples:

Travel.com 15,549 , Travelocity.com 256,955
Auctions.com 2,616 Ebay.com 2,849,826
Bank.com 1,997 BankOfAmerica.com 553,664 , CitiBank.com 78,345
Laptops.com 850, Acer.com 5,549, Compaq.com 10,494 (and Compaq is not in business for many years since HP bought them)

In a $350M sale, the domain name played little role. The domain itself without a business behind it would be worth maximum $15M IMO, but I'll accept what Cybertonic said, $35M. The rest represents the value of the business.

**carlton** · 07-27-2007, 12:54 PM

Originally Posted by petrosc

... The domain itself without a business behind it would be worth maximum $15M IMO, but I'll accept what Cybertonic said, $35M. The rest represents the value of the business.

These figures seems reasonable. The part which remains questionable for me is the "springboard effect", i.e. how much of the domain's appeal aids the launch and long-term benefit to the company. I understand Francois' point that the larger and more successful the business becomes ... the more its value is based on the biz model/revenue stream and not on the pure name itself.

**Onward** · 07-27-2007, 01:51 PM

Originally Posted by cybertonic

Now what will be the sale price of Ebay today if the owners have been called this service auctions.com ? Do you really think today it will change a lot the sale price?

You do not understand...and were not responsive to my comments...you are comparing apples with oranges. Additionally, I am not saying the value of that sale is totally the domain name...not even close...I am saying you are underestimating the value of the name.

Ebay was initially called auctionnet.com...a pioneer in cyber space...a business that really did not exist before online....they came up with an original product and branded it....Business.com not so much.

Ah... what's the use...Time continue to demonstate my point.

and Petrosc...Marketing and Branding? why not yellowpages.com???? why 360 million for business.com? Not saying it is all the domain...using the domain and creating and managing the business really makes it...but do you want to do that on walstreet in Manhattan or mainstreet in Tulsa?

**petrosc** · 07-27-2007, 03:24 PM

I am not trying to underestimate the value of the domain name. Again, I said I agree to value it at $35M as Francois did - is than unreasonable? And about the example you presented, online is a very different world than offline and different rules apply. It's easier to build a multimillion dollar business online than offline.

And regarding yellowpages.com and your question as to why not... Well you tell me... Why not yellowpages? Probably because AT&T would not sell it. I don't know everything around this sale and I don't quite know their motives and what exactly drove them to choose to acquire business.com, but I personally would consider going for YellowPages instead of Business if there was such an option. After all it's traffic seems to be at least 3x higher than business.com

**Onward** · 07-27-2007, 03:35 PM

Interesting point on Yellowpages.com being owned by AT&T...Makes sense.

I am not totally disagreeing with you and cybertonic...I believe the business built on business.com has made this a much higher sale than name alone...but not 320+ million difference... That is why I am saying Cyber is undervaluing it.

**petrosc** · 07-27-2007, 04:58 PM

I know you are not totally disagreeing, I'm not either with you

It's really hard to know who is right on this, it's just opinions we are stating here

**Rubber Duck** · 07-28-2007, 12:59 PM

Value the business as a business. Then deduct that from the sales price to get a reasonable value for the excess being paid for the name over and above what the name is already contributing to the business. This will give you a very conservative value for the domain name.

If you want a less conservative value, estimate what the business would be doing without the name, and then do the same exercise.

It is not difficult to value a business on the basis of revenue and profit. Wall Street does this everyday of the week. This is much easier than valuing the domain.

**fundraiser** · 08-01-2007, 08:14 PM

An opinion from Wired blog....

A 23x multiple is not unheard of in the tech business, but it certainly reflects the frothiness of the market that a simple vertical portal with modest revenues could command that much of a premium...

And make no mistake: I'd guess that 90% of the business's value can be attributed to the domain name itself, not the directory. In other words, you could put almost anything at that domain and be able to rake in a few million dollars a year in ad revenue without even trying.

http://blog.wired.com/business/2007/...t-busines.html