Below, you'll see a screenshot of my own personal horror. Some have already heard my story. However, many of you have not. I hope you'll learn from my experiences and become better domainers.
First off, take a look at this:
This used to be my portfolio. It's been chopped into two "companies" now. Both are fronts for the individual that underhandedly "stole" the company from me. Almost 8000 domains gone. My personal piggy bank evaporated into thin air. Due to ongoing legal considerations, I'll be disguising the name of the company and the individual.
It all started in late 1999. I was your average kid. Computers and the internet interested me. I watched domains like Screw (.com) and Hardware (.com) sell for peanuts on eBay. Sedo didn't exist yet, and the internet was a very different place. Domain names were pretty expensive at the time since NetSol and friends still had a stranglehold on registrations. Google was unheard of, and Yahoo and AltaVista traded barbs in the search wars.
I frequented AOL's chat rooms, mainly spending time in "International" and "Computers & Internet". After a while, I became interested in the business side of the internet. I became friends with an individual that was interested in similar ventures. Together, we learned a great deal and created a partnership of sorts. Individually, we both built domain portfolios of about 50 names each, most of which we had acquired cheaply during the "golden age" of domain tasting.
Between us, those 100 or so domains started pulling in a significant flow of cash. We quickly expanded. In those days, it was pretty easy to pull the wool over the eyes of a meta-search. Stuff a few keywords here and there and with a little luck, you could be near the top in a week or two. With great power comes great responsibility. The more we tinkered, the more we earned. Both of us ran multiple computers with AllAdvantage as well as auto-refreshing scripts. Hardware was pretty expensive in those days, but I was still able to afford a few toys (1ghz cpu and 512mb ram.. blazing at the time).
As the business grew, we combined our portfolios into one account and established ourselves as a business. This was the first major mistake I made. I was all of 19, and on top of the world. I went to clubs, spent money freely, drove a better car than my parents or grandparents, enjoyed VIP sections by paying my way past bouncers instead of being thrown out because I was "under aged". On an average day, I would wake up $500 richer than the day before. In my best week, I made $9000. Life was good.
I was interviewed by two or three "Young Entrepreneur" websites and I prided myself knowing that I had grown a business from nothing into a powerhouse. I expanded in every direction I could. I began to wonder about how things would be taxed, so I spoke with an accountant. Here I was, about to turn 20, and I was in the market for my first home. In the city I live in, a nice house goes for around $60,000. The house I was looking at was $180,000. I remember asking the realtor if I could tour the house, and she didn't take me seriously. When showed her my deposit slip for that week, I got a personal tour by her and the owner.
I can't stress enough that I was on top of the world. I had a gorgeous girlfriend, a new sports car, I ate at the best restaurants in my area, I partied from Thursday evening until Sunday. Calling myself a dot-com rockstar would be an understatement. Little did I know that my life was about to come crashing to a halt.
While my decadence was arguably out of control, I did find time to donate money to charity. I liked being able to mingle with well established "old money". It was nice to ruffle tail feathers as part of the "Nouveau Riche". Little did I know that my partner on the other side of the Atlantic was about to pull the most epic swindle on Earth. My partner, who we'll call "Alex" (for the sake of conversation) seemed like a descent person. I had family that frequently conducted business near Alex, so there was never a trust issue. Alex was very well educated and seemed to be an outstanding person in his community.
Our partnership had always been more of a non-formal agreement. However, when we combined our portfolios, things changed. I filed a DBA (Doing Business As) form with my local authorities and procured a business permit for "web services". Incorporation wasn't as easy then as it is now, so I started the somewhat lengthy process and started looking into copyrights and trademarks. I was proud of what I had accomplished. Its a good feeling to be able to help less fortunate people. I kept the homeless well-fed, donated business attire to help the underprivileged with job interviews, etc. All the while, I was overlooking the one critical thing that would bite me in the @$$ later on.
You see, I made the fatal mistake of running the business as an incorporated business before the incorporation actually went through. While I was taking my time to do things right (and enjoying the benefits of my new-found wealth), "Alex" was busy working on a "quick and dirty" incorporation unannounced to me. Our business would cycle through about 100 domains per month that we would allow to drop. Occasionally, I would manage to sell 30 or 40 of these in bulk lots. The first signs of trouble came when I had sold the entire lot of expiring domains and was unable to log into our Enom Business/Reseller account.
I thought "This is strange. We change the account password every Monday. This is Tuesday and the password was just changed yesterday." I sent an email to "Alex". Domain theft wasn't as big of an issue then as it is now, so I figured the problem was insignificant. Given the time difference between my country and Alex' country, I figured it would take about a day for him to get back to me. Everything had been running smoothly for years, so I never expected anything like this could happen.
Two days pass. Still no email. I went to call "Alex" via telephone. The number had been disconnected. I called my family in Europe to see what was going on. It turns out that "Alex" wasn't from that country at all, he was there on a work visa. Still, this wasn't a big deal, he had a job at a well-established bank, so I called the bank and asked to speak with "Alex". To my surprise, he hadn't been employed there in quite some time. My confusion turned into a roller coaster of emotions. Sadness, Wonder, Amazement, Rage, you name it.. I felt it. "Alex" had used his registered business to seize and maintain control of our "paper" business. The registrar had all the paperwork it needed, and they believed that I was simply an ex employee.
Here we are, 3 years later. I've recovered only a hand-full of names, litigation is still pending on the bulk of the names. Unfortunately, when you try to sue someone internationally, things get complex. When all you have is a name, and a former employer, its hard to get the information you need without paying numerous private international investigators, faxing Interpol, calling attorneys, and pounding the pavement. I can't stress enough that you should ALWAYS have an attorney look over paperwork when you're unsure of something and you should ALWAYS have a legal contract reviewed by your attorney and the legal representation of your partner, should you ever form a partnership. I was days away from closing on my dream home when this happened. Getting out of that contract cost me $30,000. Lawyers and legal council have cost far more.
First off, take a look at this:
This used to be my portfolio. It's been chopped into two "companies" now. Both are fronts for the individual that underhandedly "stole" the company from me. Almost 8000 domains gone. My personal piggy bank evaporated into thin air. Due to ongoing legal considerations, I'll be disguising the name of the company and the individual.
It all started in late 1999. I was your average kid. Computers and the internet interested me. I watched domains like Screw (.com) and Hardware (.com) sell for peanuts on eBay. Sedo didn't exist yet, and the internet was a very different place. Domain names were pretty expensive at the time since NetSol and friends still had a stranglehold on registrations. Google was unheard of, and Yahoo and AltaVista traded barbs in the search wars.
I frequented AOL's chat rooms, mainly spending time in "International" and "Computers & Internet". After a while, I became interested in the business side of the internet. I became friends with an individual that was interested in similar ventures. Together, we learned a great deal and created a partnership of sorts. Individually, we both built domain portfolios of about 50 names each, most of which we had acquired cheaply during the "golden age" of domain tasting.
Between us, those 100 or so domains started pulling in a significant flow of cash. We quickly expanded. In those days, it was pretty easy to pull the wool over the eyes of a meta-search. Stuff a few keywords here and there and with a little luck, you could be near the top in a week or two. With great power comes great responsibility. The more we tinkered, the more we earned. Both of us ran multiple computers with AllAdvantage as well as auto-refreshing scripts. Hardware was pretty expensive in those days, but I was still able to afford a few toys (1ghz cpu and 512mb ram.. blazing at the time).
As the business grew, we combined our portfolios into one account and established ourselves as a business. This was the first major mistake I made. I was all of 19, and on top of the world. I went to clubs, spent money freely, drove a better car than my parents or grandparents, enjoyed VIP sections by paying my way past bouncers instead of being thrown out because I was "under aged". On an average day, I would wake up $500 richer than the day before. In my best week, I made $9000. Life was good.
I was interviewed by two or three "Young Entrepreneur" websites and I prided myself knowing that I had grown a business from nothing into a powerhouse. I expanded in every direction I could. I began to wonder about how things would be taxed, so I spoke with an accountant. Here I was, about to turn 20, and I was in the market for my first home. In the city I live in, a nice house goes for around $60,000. The house I was looking at was $180,000. I remember asking the realtor if I could tour the house, and she didn't take me seriously. When showed her my deposit slip for that week, I got a personal tour by her and the owner.
I can't stress enough that I was on top of the world. I had a gorgeous girlfriend, a new sports car, I ate at the best restaurants in my area, I partied from Thursday evening until Sunday. Calling myself a dot-com rockstar would be an understatement. Little did I know that my life was about to come crashing to a halt.
While my decadence was arguably out of control, I did find time to donate money to charity. I liked being able to mingle with well established "old money". It was nice to ruffle tail feathers as part of the "Nouveau Riche". Little did I know that my partner on the other side of the Atlantic was about to pull the most epic swindle on Earth. My partner, who we'll call "Alex" (for the sake of conversation) seemed like a descent person. I had family that frequently conducted business near Alex, so there was never a trust issue. Alex was very well educated and seemed to be an outstanding person in his community.
Our partnership had always been more of a non-formal agreement. However, when we combined our portfolios, things changed. I filed a DBA (Doing Business As) form with my local authorities and procured a business permit for "web services". Incorporation wasn't as easy then as it is now, so I started the somewhat lengthy process and started looking into copyrights and trademarks. I was proud of what I had accomplished. Its a good feeling to be able to help less fortunate people. I kept the homeless well-fed, donated business attire to help the underprivileged with job interviews, etc. All the while, I was overlooking the one critical thing that would bite me in the @$$ later on.
You see, I made the fatal mistake of running the business as an incorporated business before the incorporation actually went through. While I was taking my time to do things right (and enjoying the benefits of my new-found wealth), "Alex" was busy working on a "quick and dirty" incorporation unannounced to me. Our business would cycle through about 100 domains per month that we would allow to drop. Occasionally, I would manage to sell 30 or 40 of these in bulk lots. The first signs of trouble came when I had sold the entire lot of expiring domains and was unable to log into our Enom Business/Reseller account.
I thought "This is strange. We change the account password every Monday. This is Tuesday and the password was just changed yesterday." I sent an email to "Alex". Domain theft wasn't as big of an issue then as it is now, so I figured the problem was insignificant. Given the time difference between my country and Alex' country, I figured it would take about a day for him to get back to me. Everything had been running smoothly for years, so I never expected anything like this could happen.
Two days pass. Still no email. I went to call "Alex" via telephone. The number had been disconnected. I called my family in Europe to see what was going on. It turns out that "Alex" wasn't from that country at all, he was there on a work visa. Still, this wasn't a big deal, he had a job at a well-established bank, so I called the bank and asked to speak with "Alex". To my surprise, he hadn't been employed there in quite some time. My confusion turned into a roller coaster of emotions. Sadness, Wonder, Amazement, Rage, you name it.. I felt it. "Alex" had used his registered business to seize and maintain control of our "paper" business. The registrar had all the paperwork it needed, and they believed that I was simply an ex employee.
Here we are, 3 years later. I've recovered only a hand-full of names, litigation is still pending on the bulk of the names. Unfortunately, when you try to sue someone internationally, things get complex. When all you have is a name, and a former employer, its hard to get the information you need without paying numerous private international investigators, faxing Interpol, calling attorneys, and pounding the pavement. I can't stress enough that you should ALWAYS have an attorney look over paperwork when you're unsure of something and you should ALWAYS have a legal contract reviewed by your attorney and the legal representation of your partner, should you ever form a partnership. I was days away from closing on my dream home when this happened. Getting out of that contract cost me $30,000. Lawyers and legal council have cost far more.
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