Sramana Mitra: How much money did it take to get this rolling?
Colin Campbell: We’ve raised $11.6 million to date. Initially, I put some of my own funds into it.
Sramana Mitra: So you did not fund it yourself? You did take financing?
Colin Campbell: I didn’t take any financing. The way it worked is each applicant had to lay down a $185,000 application fee and put their stake into the ground. You had to declare the name. If there were multiple companies applying for that domain extension, then it would go to an auction. There were multiple companies applying for the .club extension including one that had raised over $100 million dollars.
We went into an auction scenario and we were successful at winning that. Prior to winning the auction, I didn’t have enough funding myself to compete in this auction. I needed to raise money. I had to be careful. I didn’t want to let everybody know how much I was raising because I didn’t want to push the auction price much higher. I didn’t want it to get overvalued.
I ended up going through my LinkedIn contacts and was able to raise $7 million. There was a couple of things that I had done in that offering. One is I did a Private Placement Memorandum (PPM) and we did a Reg D filing. Most lawyers will say it’s a great idea to do a PPM because it mitigates risk for potential lawsuits down the road. It also takes an intangible and makes it tangible. A document like that lays out a serious business plan and it’s done in a way that is almost like a prospectus. It’s fairly legalized. I was able to raise $7 million through my LinkedIn contact.
I think one of the funniest ones was that I had spoken about entrepreneurship at MIT. One gentleman in the audience connected with me on LinkedIn. He heard about the offering and asked to come in on it. What I learned from what whole experience was really to build your own LinkedIn profile. I don’t have a profile like yours but what I do have is I have a few thousand people who know me in this industry and follow me. Establishing those contacts over time was important and I was able to use those contacts to raise the money. I think I sent out about 45 teasers and we have 27 shareholders. It was a very high hit rate.
Obviously, I have a reputation in the past for being a serial entrepreneur. The offering I presented was fairly conservative. I really believe that people have to make money on the ground floor and keep making people money. That’s one of my keys to success – don’t get too greedy in the initial stages. I often see that in tech companies. People ask me to invest in an idea and they slap a $5 million to $10 million valuation. Ideas are worthless. It’s all the execution of the idea and where you get the customers from.
I raised the money. We went to the auction and won the auction. Somebody was filming the auction. It filmed us winning the auction. It was very exciting because we worked two years on it just to get this name. Once we got the name, we spent the year on regulatory matters. We were able to launch in May 7, 2014. To date, we’ve almost registered 8,000 domain registrations. We have registrations in almost every country in the world.
Sramana Mitra: Tell me about how you acquired these domain name clients. Who were they and how did you find them?
Colin Campbell: First of all, club is a great name. It works well in every country in the world including China where you walk down the streets and you see simplified Chinese characters and then CLUB. I’ve seen that in Japan and Russia too. It’s fascinating to see that and to see that it means so many different things to so many different people. A lot of people think of it as nightclubs. A lot of people think of it as business clubs.
In our case, we can’t actually sell directly because we are the registry. We are the ones who have the rights to the name but we can’t sell directly. The way our industry is set up is you have to be a reseller. The most famous of those is GoDaddy. GoDaddy will promote .club names to their customers. They’ve sold about 50 million .com’s. Just recently, they have launched new domain extensions. We’ve sold over 100,000 .club’s on GoDaddy. Of all the new domain extensions that have launched, we’ve sold the most domains on GoDaddy.