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interviews Inside Interview: What's It Like to Buy a Domain Name from Rick Schwartz?

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This week, I had the pleasure of interviewing Punchbowl Founder and CEO Matt Douglas. Punchbowl is an online invitation and digital greeting card company that has gone from strength to strength since opening for business in 2007.

What makes Punchbowl so interesting from a domain investment point of view is their six figure purchase of Punchbowl.com from legendary domain investor Rick Schwartz. Rick is renowned for being a tough negotiator and has only ever sold a handful of domain names.

So why did Matt Douglas decide to spend six figures on Punchbowl.com? Was it a worthwhile investment? What was it really like to negotiate with Rick Schwartz? Find out below.


1. Can you give us a brief description of your company Punchbowl?

Punchbowl is a technology company that's focused on building products for the online invitation and digital greeting card market. Our best-in-class user interface is optimized for mobile, tablet, and desktop. Our online invitations feature the largest collection of licensed characters with exclusive content from Disney Consumer Products, Nickelodeon, Sesame Street, Chuck E. Cheese, and more.


2. Your company launched its website on MyPunchbowl.com. Was this your first choice of domain name at the time?

It wasn't our first choice. We were looking for a domain name that had a strong noun and MyPunchbowl was sort of a compromise. At the time, MySpace was still pretty popular, and Yahoo was pushing MyYahoo. We thought MyPunchbowl was a pretty good brand, given the available choices (one note: we originally had also the concept of creating OurPunchbowl.com for wedding related events, so we didn't think the pronoun was a hindrance).


3. Why did you decide to acquire Punchbowl.com?

As we thought about potential domains, we were inspired by KAYAK.com because it is a really good, iconic name that's easy to remember. For our business, we wanted a noun that has a strong association to parties. A punchbowl is often the center of a party, and it's a good iconic brand.

With that in mind, we acquired Punchbowl.com. I was happy that it also has a few key characteristics that I wrote about in a blog post: it was less than 11 characters, easily spread by word of mouth, and there were no common misspellings (we originally batted around domains using the word "fiesta" but that's a word that is frequently misspelled).


4. Did you use any tools, services, or data to determine your budget for the acquisition of Punchbowl.com?

No, the only tool we used was Escrow.com to complete the transaction. We didn't use other tools because we had a good idea of how important it was to have a premium domain, and we understood that many people thought our site was already Punchbowl.com even though at the time is was MyPunchbowl.com.


5. You acquired Punchbowl.com from the legendary domain investor Rick Schwartz. Can you describe your experience in doing business with him?

Rick is a very interesting guy. I found him to be funny, engaging, and very reasonable. At his heart, he's a business guy so we saw eye to eye. Some people like to criticize Rick and his domain collection, but I chalk that up to jealousy. He had the foresight to figure out that domains are like real estate: there are a lot of people who want to live on the coast of Florida and only a few who were smart enough to buy up a bunch of that land. Whatever industry you're in (cars, hotels, insurance), having a premium domain still makes financial sense.


6. How long did negotiations take before yourself and Rick could agree on a price?

Rick and I formed a relationship long before we started negotiating. I got to know him on a personal level and learned about what makes him tick. I read a lot of his writing, had a few phone calls with him, and I would share things over email that I thought were relevant to him. When the actual negotiation started, we got to an agreement very quickly. We did this deal in the same way I got the Disney deal done: we never met face to face. In today's online world, it's still important to remember to form a relationship first, then do business.


7. Did you notice an increase in traffic and registrations after your Punchbowl.com acquisition?

While there wasn't an immediate effect, there is no doubt that the stronger brand name has gotten us to where we are today. In the year following the acquisition, we doubled traffic. Since then, we've grown really significantly. Acquiring punchbowl.com is one of the most important things we've done to establish our site as a premium destination for online invitations. I'm still very grateful to Rick and his willingness to work with us.


8. After re-launching on Punchbowl.com, you raised around $3.5 million in 4 separate rounds of funding (according to CrunchBase). Do you think that the domain name and rebranding play any part in attracting funding?

First and foremost, we raised money on solid business financials. Like most online companies, our revenue grows with traffic, so I have no doubt that the premium domain played an important role. The premium domain name also gave us momentum as a company, and that hasn't slowed down. And the fact that we continue to grow and are considered the gold standard in online invitations is all part of the story.


9. Do you have any advice for other startups who may be considering upgrading to a premium domain name?

For new companies forming today, the world has changed a lot. If you are creating a mobile app based business, then a premium domain might not be as important. On the other hand, if your startup is focused on business customers who access your product or service during the daytime via their laptops, it's still very important. For consumer-based businesses that want to be multi-channel, then a premium domain is still an important part of an overall branding story. And despite what you might read, there is still no alternative to a great .com.

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Thanks to Matt for providing an excellent insight into his company and his thought process behind acquiring Punchbowl.com. It's really refreshing to read the words of an end user that really "gets" domain investing and who "gets" why premium domain names are still worth the money.

Matt makes some excellent points throughout the interview with some stellar advice for new startups, too. It's also interesting to get a little insight into how to best negotiate a domain sale with Rick Schwartz.

The price paid for Punchbowl.com cannot be disclosed, although at the time of the sale in 2009, Rick confirmed on his blog that the deal was "a multiple six figure deal plus other considerations."

Matt Douglas can be found on Twitter @MattDouglas, and Punchbowl can be found @Punchbowl. If you enjoyed Matt's interview, we'd like to ask that you tweet him.

Matt also runs a blog called Startup Swami where he gives out plenty of free advice, and it's well worth reading. If you'd like you receive updates from his blog, you can subscribe here.



Inside Interviews is a blog series profiling the buyers of high-value domain names. Find out their motives, negotiation tactics, and their opinions on popular domaining topics only on the NamePros Blog.
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
Great article James. Very informative and insightful. It's interesting that many deals have an NDA, particularly on the price. What are the reasons for that? I can think of a few:
  • The seller let it go at below his/her normal price and doesn't want future buyers to think they can negotiate him/her down.
  • The buyer may have paid premium and is embarrassed for the domain world to know how dearly they paid for their name.
  • The buyer is a well known person and wants to keep their business private
  • The buyer has a biz strategy and doesn't want to tip off the competition
Are there other reasons? Someone please enlighten me. :laugh:
 
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@Keith DeBoer I think in this case the buyer may have requested an NDA, as Rick is usually very forthcoming with his sales figures.
 
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Rick got an amazing price on this domain.
 
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Nice interview! thanks james :)
 
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@CrocodileDundee thanks, glad you enjoyed the interview. I hope to bring many more soon :)
 
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James, you smacked this one out the park!

Thanks for providing this great interview. It's VERY important to get an end user's point of view and the psychology they use when purchasing a domain name.

And despite what you might read, there is still no alternative to a great .com.

=)

-Omar
 
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James Iles thanks for the great interview, I like all your interviews especially this one, how much he paid for this name ?
 
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Thanks @domainrz. The price paid for the domain wasn't revealed, but at the time Rick Schwartz said it was a multiple six figure deal.
 
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Thanks for the article.

Anyone know exactly what is meant by "...plus other considerations.". I would like to know what Rick was looking for aside from money.
 
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@LucidDomains in other domain deals, I believe Rick has received company stock or a percentage of profits on top of cash. This may have been what happened here, but aside from Rick's comments there are no public details of finances related to this sale.
 
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