Inside iREIT: How a Startup Company Became an Industry Giant Overnight

[Ron Jackson]

Just 18 months after opening their doors, Internet REIT, Inc. (iREIT) has amassed over 400,000 domains and become one of the key players in the wave of consolidation rolling through the domain industry. In the second quarter of 2006 alone, iREIT spent over $11.5 million on 34 portfolios and added 40,000 new domains to their roster.

So how did this kind of behemoth suddenly appear in our midst? To find out, DNJournal.com, for our new August Cover Story, talked to the company’s three principals (CEO Bob Martin, President Marc Ostrofsky and Chairman Stuart Rabin) and revisited the events that brought them together as Internet REIT, Inc. For the full story click here

 

[Kate]

Interesting insight as always. Thanks Ron.

 

[dna]

They may make money but they give nothing of value in return.
All they do is make websites that no one wants to go to.
And no one wants to find themselves.
Are people who make money without contributing anything
of value really to be respected and admired?

 

[Ron Jackson]

They may make money but they give nothing of value in return.

Forgive me, but that is complete nonsense. If they provided nothing of value they wouldn't be making any money. Their traffic is highly valued by advertisers (as is traffic provided by any domain owner) and advertisers are more than willing to pay money in return for that valuable traffic. People generally admire successful businessmen and try to emulate their success. They are in a perfectly legitimate business that is no different than selling any other form of advertising from newspaper, magazine and TV ads to billboards. Why should anyone disrespect them for that? You may not see the value there but just about everyone else I've ever met in this business does, or they wouldn't be here in the first place. If you really feel this way, I'm curious as to why you are here?

 

[dna]

I am all for making money and being successful.
But, 400,000 web sites with nothing but ads is an abomination.
It is different from newspaper, magazine and TV ads in
that newspapers, magazines and TVs provide usefull content.
These web sites do not.

I dont know why you care why i am here, but I occasionally purchase
a domain name and develope a website:

http://www.fiction.us
http://www.spanish.cc
http://www.baroque.us
http://www.russian.cc

 

[Ron Jackson]

I am all for making money and being successful.
But, 400,000 web sites with nothing but ads is an abomination.

Really? They paid for those websites and own them, which gives them the right to use them in whatever way they see fit - or do you favor taking the Communist approach and doing away with private property rights? How about billboard owners who put nothing but ads on their billboards? Clear Channel owns hundreds of thousands of billboards. Maybe we should run them out of business because they are obviously doing something wrong.

How about real estate investors who buy thousands of acres of land and build nothing on their land. Later developers come along and they are able to sell their land for a profit - but they produced nothing of value themselves to your way of thinking (though they did put their capital at risk just as domain buyers do). I don't see anyone criticizing those investors or saying that the developer is a more legitimate businessman than the real estate investor. I can give you hundreds of other examples. It's called capitalism and there is nothing wrong with an investor making a profit or with someone buying something and doing whatever they want with what they bought.

As to iREIT contributing nothing, they have spent tens of millions of dollars purchasing from domain owners, registrars, hosting companies, lessors of office space, supporting 3 dozen employees, paying local, state and federal taxes, etc. Have you contributed even a fraction of that to support other businesses, individuals and your government? Have you made even a fraction of the impact they have made on the economy? I didn't think so. Yet you criticize them for producing nothing of value. Give me a break.

Because you've bought some domains and built a few websites and are using some of your domains in a different way than iREIT is using some of the theirs, that somehow makes your use of your property more valid than their use of their property? Incidently they are adding rich content to many of their domains and will be unveiling a major new developed site next week (bands.com) that will blow away anything you have produced.

I am just very tired of people insinuating that domainers, unless they want to also be webmasters, are somehow doing something that isn't quite right. That is not a standard anyone is held to in any other business and there is absolutely no reason domainers should be denigrated either.

 

[Luc]

Thanks for yet another great article Ron.

I am all for making money and being successful.
But, 400,000 web sites with nothing but ads is an abomination.

I understand your frustration with seeing a lot of quality domains being parked, which makes it look like they are not being used.

One thing you should understand is that many of iREITs domains were picked up through portfolio acquisitions (many previously parked domains purchased at once). It's much easier to park now, develop over time, than to try to develop everything at once.

iREIT has many great projects in the works. You'll see lots of their premium generics developed in the coming months.

 

[Dave_Z]

All they do is make websites that no one wants to go to.
And no one wants to find themselves.

And you have the stats to prove that?

Their stats will surely disprove what you just said. And independent providers
can also get stats after a period of time and show the actual results, if you
doubt the domain registrants' results.

There are people who go to online "yellow pages", look thru a series of ads,
and click one that catches their attention. It's what they're looking for.

And if they're just looking for ads, why clutter with content they don't want?
Sure they can just google it, but that's a user's choice.

You can not see the value. But I and an nth number of people do, and they
don't necessarily include domainers like me.

 

[dna]

Maybe some people do watch television for the commercials.
Maybe some people do go for rides in the country just to
see the billboards. Lets find these people and have them
sterilized before they have children. Are you willing to name
names Dave?

Luc, are you suggesting that they have parked 400,000
domains until they have time to develope them?
How long do these people think they are going to live?

 

[mosilager]

Face it folks, this is America, the land of opportunity and one has a right to do what they can within the limitations of the law.
I personally commend Ireit for their great business prowess and throughly agree with Ron's comments, in that internet advertising is being used the same way as major advertisers are using the television, radio or magazines are their medium.

 

[Dave_Z]

Lets find these people and have them
sterilized before they have children. Are you willing to name
names Dave?

And what does "let's find these people and have them sterilized before they
have children" mean exactly? Are you referring to the likes of the people Duke
here has posted about?

Oh well, you're certainly entitled to believe what you want to believe. I'll leave
it at that.

On the side, I must apologize for my snafu post above: I meant to say those
who understand the value of what Duke talked about includes non-domainers
like myself. I can't do much domaining 'coz I can hardly maintain it for now. :D

 

[Damion]

I understand DNA's view on this to some degree and Dukes view on the matter.

To give an example of an premium domain that used to have value for the visitor and now holds a merely 10% value for the visitor regarding finding the information what he/she is looking for and the enjoyment of wading through such a website is Villas.com

This domain was a very interesting website to visit and to browse for villas.
Something one would expect with a domain like that.
I was quite amazed with the inventory of Villas for display in various countries.

Beautifull Villas on the most beautifull locations.
Not that i am actively looking to buy a villa but it's fun to do some window shopping once in a while and to see what's out there

Now for me personally if i visit that domain as of now it really does not contribute anything. No matter what link i clicked on that landing page you would be presented with the same page over and over again containing the same irrelavant ads.

So Villas.com is a prime example of what once was a premium domain with a content rich website backing it up it's now basicly worthless for the visitor.
At least that is my experience as of now compared to the experience i had previously when i visited Villas.com

Is the domain worthless to an advertiser? No of course not since the domain consists of a global recognized keyword and attracts a substantial amount of visitors based on type in traffic and traffic that was coming from links all over the net that linked to the original site and content.

I don't think DNA was questioning the legality of such business but more the experience a visitor has landing on such parked domains.

These automated systems can sometimes be on point and sometimes it can be way off.
Premium domains like Villas.com can be used far more efficiently by not using a automated system but more a hands on approach in collaboration with companies/individuals wanting to present their business to potential clients.

Once again a balance needs to be found for this type of business model.
Actually i think the former site had far more potential for creating revenue and at the same time presenting the visitor what they are really looking for.

And i am positive the bigger companies as iREIT are fully aware of this.

 

[Ron Jackson]

i am positive the bigger companies as iREIT are fully aware of this.

You are right about that Ed. All of the mega portfolio holders are moving toward rich content for their domains (most have bought or partnered with professional content companies to do this).

But what people have to remember is this - the owner of, for example, Villas.com, PAID for the domain. The visitor paid nothing. I paid for my house so I can use it in the way that works best for me (to live in it, rent it out, whatever). I am under no obligation to open the front door and let visitors aimlessly wander in and look about to see what they like.

You may think the current use of a domain is not the best one, and you are free to think what you want. But the domain owner gets to make the call. If they want to park the domain and provide value to advertisers that's their business. But they are most definitely providing value (I have paid for Adwords to be to shown on parking pages to help drive traffic to my businesses - so no one can tell me they are of no value).

DNA may see no value to him, but the world doesn't revolve around him and fortunately we don't get to go around sterilizing people whose ideas aren't valuable to us personally. Hitler tried something similar and it didn't work out too well for him. If we are going to talk about abominations, people who think that way are much more deserving of the description than domain investors who have put a great deal of capital at risk and produced great value for advertisers, other domain owners, employees, tax collection agencies, etc. like iREIT has.

 

[Damion]

You are right about that Ed. All of the mega portfolio holders are moving toward rich content for their domains (most have bought or partnered with professional content companies to do this).

But what people have to remember is this - the owner of, for example, Villas.com, PAID for the domain. The visitor paid nothing. I paid for my house so I can use it in the way that works best for me (to live in it, rent it out, whatever). I am under no obligation to open the front door and let visitors aimlessly wander in and look about to see what they like.

You may think the current use of a domain is not the best one, and you are free to think what you want. But the domain owner gets to make the call. If they want to park the domain and provide value to advertisers that's their business. But they are most definitely providing value (I have paid for Adwords to be to shown on parking pages to help drive traffic to my businesses - so no one can tell me they are of no value).

DNA may see no value to him, but the world doesn't revolve around him and fortunately we don't get to go around sterilizing people whose ideas aren't valuable to us personally. Hitler tried something similar and it didn't work out too well for him. If we are going to talk about abominations, people who think that way are much more deserving of the description than domain investors who have put a great deal of capital at risk and produced great value for advertisers, other domain owners, employees, tax collection agencies, etc. like iREIT has.

You're absolutely right that the domain owner makes the call, very true.
And without a doubt such set up does ad value for advertisers, other domain owners, employees, tax collection agencies.

But around whom does this set up revolves on?
It revolves around the visitors in general. If there are no visitors the domain holds no value what so ever.

So if a visitor is being confronted to much with the same situation i experienced with Villas.com they would click away since it doesn't provide value to me as a visitor since i am too a visitor and my experience was that i was being confronted over and over again with irrelevant ads no matter what link i clicked on that page.

So whenever i stuble upon the same layout i would be clicking the back button before you can even say "back".

Resulting that if i would type funnypictures.com i would click away in a instant since it uses the same layout and reminds me of the bad experience with Villas.com

The term "value" is in my book primary relevant to the visitor and the advertisers, other domain owners, employees, tax collection agencies are relevant on a secondary level.

Come to think of it tax collection agencies are not relevant at all

And the sterilizing comment was uncalled for and irrelevant :bingo:

 

[CFH DJB]

I think that iREIT is a brilliant company, and I do not see how it could be construed that they are underhanded. If their ads were not useful, no one would click on them.

 

[Damion]

Underhanded is also not the term i would use.

 

[Carlton]

... If they want to park the domain and provide value to advertisers that's their business. But they are most definitely providing value.

This point has much validity. Parking also provides value and utility to the internet user. The ads are designed to help people navigate to specific content they are looking for. I find landing page results are often more focused and helpful than general search engine non-paid results.

 

[dna]

The sterilization comment was just a joke,
I can see that shouldn’t of made it.
I was talking about the non existant
people who prefer ads to real content.
But, there do seem to be people here that actually like these ads
I will show restraint and not comment further on that.

No one here seems to think that one company with 400,000
websites containing nothing but ads is obscene.
I hope ICANN agrees with you, because if they want
to do away with this obscenity they have a way of doing it.
Raising the registration fee on domain names.
When the registration fees are more then
the ad revenue, iREIT will go out of business.
And that is hardly the only thing that ICANN can do.
And what ICANN does to iREIT, they will effect
everyone else in Namepros.

I’ve really never given much thought to Clear Channel
and their billboards, but I am quite sure that a lot
of people who aren’t Communist would like to see
them go out of business.

And I didn't denigrade domainers. That was just a lie.

 

[Dave_Z]

I guess you gave it a try but it didn't work out for you, dna?

 

[dna]

You may think of yourselves as domainers.
But to the world we are cybersquatters.
It is not a term of endearment.
We are not liked.
Those fools at iREIT can harm us all with their bad behavier.