On June 22, I wrote a long explanation of why the sale of “business.com” is not merely the “domain name” story it was being spun on that day when it was leaked the company was on the market. Last night, it was announced that Business.com was purchased by RH Donnelley, the Yellow Pages company. This morning on NPR, it was still being spun as a URL story. (Another example: the lede of the Wall Street Journal article is, “The Web’s original high-price domain name has been sold again — for another lofty price.”) That’s the easy story. Hey, I own the URL SmallBusiness.com, so I guess I should shut up and agree. So I will. It was all about the domain name.
According to Rafat Ali at PaidContent.org, “the auction for the company was heated, and initially included IAC, New York Times, DJ and News Corp. IAC didnâ€™t end up bidding, News Corp dropped out as the price went above $300 million, Dow Jones couldnâ€™t pull it together in the wake of all the turmoil with News Corp bid, and New York Times was in there until late in the game.” (For the record, I learned about this first from PaidContent.org, who beat the Wall Street Journal in reporting it last night.)
Despite there being a real company with real revenues and earnings, I will say this: The domain name did matter as did the steadfast commitment of Jake Winebaum. While most people today know Jake as an “online” guy (back in the day, he was head of Disney’s online unit), I still think of Jake as a magazine entrepreneur. He’s several years younger than me, but from afar, I’ve always “looked up” to him as a great role model for being scrappy, determined and creative. Most importantly, however, is his ability to see a few moves beyond what is happening at the moment. We once did a project that appeared as an insert in one of Jake’s magazines, so I had the chance to be an “ad salesman” along side him as we schlepped our way through a day’s worth of meetings at a long-ago CES (he may or may not remember the project). You learn a lot about someone when you pitch major advertisers with them. I knew from the experience that Jake is not a guy you bet against.
So, yes, I love this story. Jake understood the opportunity and risk — and he lived through years of smart-ass scorn from lots of people in the bleachers who had no idea what he was doing. I am happy he is vindicated.
And just for math purposes, let me note: The $7.5 million that Winebaum reportedly paid for the domain name (although, through the years, he and others have waffled a bit on what exactly that price was and how much of it was in cash or “paper”) represents about 2% of the sales price of the company. If Jake had not spent that $7.5 million on the URL, would he have been able to sell the company sitting on that property for $350,000,000? That’s what you call a $342,500,000 question.
Later: Several additional facts came out in the RH Donnelly press release: Business.com has $50 million in revenues and 100 employees (“technologists?”). Winebaum will become president of RH Donnelly’s interactive unit. And the transaction includes “considerations.”