Misleading headlines and stories about potential Business.com sale spread like wildfire.
Business.com is for sale. That much we know. But it’s not only the domain that’s for sale. It’s a business that’s been around for over 7 years. Its 2007 EBITDA was about $15M according to a Wall Street Journal online article. That article also says some people expect it to sell for $350M at auction, but that hasn’t occurred yet.
So why are we seeing headlines like this, from respected publications such as ZDNet?
What’s in a domain? $400 million if you’re Business.com
If you just read that headline you’d assume the domain name business.com sold for $400M. In fact, if you read the first half of the ZDNet story, you’d still think it was only the domain name for sale.
But it’s not. It’s the business. Not just the domain. End of story.
Yes, the domain is worth a lot and has helped Business.com become what it is. Even without an attached site I’d say it’s worth about $5M-$10M based on recent big ticket domain sales.
And no, the domain didn’t really sell for $7.5M in 1999. It sold for $7.5M in illiquid stock. The company ended up paying seller Marc Ostrofsky $2.0M to redeem the stock in 2004. There’s a big difference between $7.5M in stock and $7.5M in cash. (I mean no disrespect to Ostrofsky. It was still a landmark sale that helped propel the domain name business. Marc had the guts to buy the domain for a six figure sum, and has since accumulated one of the best generic .com portfolios round.)
The story of business.com shows how a good domain name can be the foundation for a business. But it doesn’t guarantee success. Business.com has had its share of ups and downs. It moved to a direct pay-per-click model a few years ago. Then it abandoned it in favor of third party ads. Now it’s back to a direct model. Many people probably left the business for dead, but it has perservered.
I wish Jake Winebaum and Sky Dayton best of luck with the sale. But let’s stick to the facts and control the nonsense spreading across the web.
Here’s another misleading piece, this time from Red Herring:
And it appears a new record may be in the works. Business.com, which sold for a then-unprecedented $7.5 million in 1999, could sell again soon for as much as $400 million, according to The Wall Street Journal.