In a very interested article in Newsweek.com, Jake Winebaum is interviewed. Mr. Winebaum apparently is one of the founders of a company called ecompanies, which bought the domain, business.com for $7.5 Million in 2000, or did they pay that much?
In his interview he is quoted regarding the $7.5 Million dollar purchase price paid for business.com:
“”””The $7.5 million was a stock deal that we did in 2000 when Internet companies were fairly highly valued. When we did our refinancing in 2004, that stock was revalued and we redeemed it for $2 million in cash. So it was $2 million.””””
Mr. Winebaum also claims he purchased the domain Work.com in 2001 for $400K.
There is no explanation given why, now 4 years later, (from the “redemption) he is first talking about the domain selling for only 2M.
Any way, its a interesting read and you should check it out.
Consistently read.. and enjoy your blog. Thanks for the article.
It has the ring of truth in it. Never could figure out why a domain at that point in time would sell for $7.5M when no other domains had sold for a fraction of that. Especially what I consider a good but not great domain name.
On the other hand, many of the deals you hear about have inflated numbers to make everyone look good. I see them all the time. Many in this industry. That is why the devil is always in the details and CASH always was and always will be king.
I wonder what this will do to the legend now that we know and the media knows it was probably just a myth?
Would there have even been an IREIT, if this sale was reported at all stock rather than a world record 7.5M cash plus stock?
I don’t see the problem here.
Public co’s buy private co’s all the time with all stock transactions.
At that moment in time the # shares in the transaction were valued at 7.5M
The seller took a chance and held onto the stock for 4 yrs . Stupid move as it cost them 5.5M
They should have sold the stock into the bull tech market.
The sale was for 7.5M!
You can’t look at it 4 yrs later and say it was for 2M just because Winebaum bought the stock back.
If I bought that stock for the 2M, Winebaum can’t say that and there is never any confusion over this.
The original sale was valued at 7.5M and nothing can change that.
Yes, I believe it was an all stock deal at $7.5M that was redeemed at 2.0M. Ostrofsky said in an interview with Modern Domainer that it ended up being worth 8 figures.
I’m going to go with Wineblaum on this one since he has nothing really to gain by saying it was lower than the original amount.
Good point Scott. He had the money if he wanted it. All he had to do was sell as you said, unless their was a provision in the contract that stated he had to hold them x amount of years before selling.
Guys
Like Andrew has said, I think that all the representations that Marc has made in public about this deal was that he got 7.5M AND stock and that he received a total value in the 8 figures for the domain.
None of us know if the stock Marc received was restricted or not available for immediate sale which often is the case, or if only a certain amount could be sold within a certain period of time.
We also don’t know what the value of the stock was the first time he could sell it.
Your assuming he could have cashed out on day one all the stock he got, but usually the terms of the deal do not allow you to do this.
I’m saying is that he used this sale to catapult him into being a leader in the domain industry, and get Ireit off the ground and now in light of this interview it looks like the deal was not as advertised by Marc.
FWIW, Article from 2006. Correct?
re: Business.com selling price
In certain circles it has been known that Marco didn’t actually sell Business.com for what he said he did (both Business.com / Ebusiness.com). Though the sale did help propel Marco and the domain industry, it has always been disappointing to know the truth and have no one believe you until Jake’s interview. Let’s not forget the real story here, what Business.com sold for in the right hands, after development: nearly $350,000,000
Now that’s a “true” success story.
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Mike,
That’s just the wrong way to look at it.
I don’ care if there was any kind of restrictions on selling the stock.
First your speculating, nobody said that.
Second, it’s irrelavent.
At the time of the sale the value of the stock that was transferred was 7.5M
Interesting response by Rick Schwartz
At one of the first domainer shows Marc attended, In a conversation i had with him he admitted that it was an all stock deal and that few years later he cashed out with only $2m. This is exactly what this article says.
The other part that could be taken from this saga is that Marc made a great deal, but cashed out too early. Assuming Marc owned at least 10% of the company stock, he could have cashed out with at least $35m.