From the Article in DNJournal, by Ron Jackson
Some say it just can’t be done, but geo domain giant Skip Hoagland isn’t buying it and a quick look at his many developed properties, including Atlanta.com, Charleston.com, HiltonHead.com and BuenosAires.com (developed in both Spanish and English), indicate that he knows what he is talking about. Hoagland has a hand in dozens of established websites with hundreds more on the horizon. These are fully developed, well trafficked sites that draw visitors back over and over again. They bear no resemblance to the cookie cutter made for AdSense one-hour wonders that so many domainers settle for.
To take advantage of and accelerate the growing interest in the geo domain space, Hoagland has also gotten involved in building a cutting edge network of industry specific sites like GeoPlatforms.com that we will talk about in depth later in this article. His solution to developing on a broad scale has also allowed him to get sites built outside the geo space on some of his great generic domains like Fishing.com and OutdoorFurniture.com (for a list of some of his top owned and co-owned domains and websites – taken from a total portfolio of approximately 2,000 domains).
Hoagland’s many Internet investments are held in a company called Domain New Media LLC which also has a geo domain division called Geo Domain New Media. “We are a diversified New Media company that, in addition to a diversified Internet portfolio, also owns traditional media products like leading tourist magazines and a brochure distribution company,” Hoagland said.
So what is his domain development secret? How did he find the holy grail that everyone else has been looking for? Hoagland’s answer is “teaming up with the right partners.” But isn’t the partnership path fraught with danger too? How can you be sure your partners will hold up their end of the bargain and not leave you holding the bag? Hoagland told us the answer is a carefully written contract that spells out everyone’s responsibilities in detail so that key issues are settled before a development project gets underway. His model contract will be one of many tools available on a soon to be launched site for developers (part of his geodomain network) that will be located at GeoBusiness.com.
To give you an exclusive inside look at his business model and the solutions he has found to problems that have vexed so many others, we talked at length with Hoagland (as well some of his partners) for this article. Before we raise the curtain, let’s set the stage with a formal introduction to Skip Hoagland – where he came from, how he got started and what it took to get where he is today.
Hoagland grew up in Atlanta, Georgia, a city whose .com domain name he would one day own. His dad’s job had required the family to move frequently leaving him playing the role of new kid on the block and going to schools where established cliques weren’t always friendly to new faces. “I think I acquired a survival, type A kind of personality because of that,” Hoagland said. “I came from a lower middle class family and we didn’t have a lot of money to go to good schools. I wasn’t a great student anyhow and I never finished college because I had to get out there and get to work.”
Hoagland found he had a knack for sales and marketing so early on he decided he would use those skills to work for himself, building his own enterprises instead of someone else’s. He had both successes and failures along the way and as any entrepreneur will tell you, the things you learn from the failures are just as important as what you learn from your successes. While still in his 20s he got his first big break when a major developer of South Carolina’s Hilton Head Island and a major resort there, Sea Pines Plantation, asked him to move to Hilton Head to organize some aquatic activities for guests.
Soon after arriving at this major tourist destination, Hoagland saw an opportunity to make money by providing information about the popular area by printing and distributing brochures devoted to local attractions. “I came up with this idea to create a brochure rack for hotels to clean up all of the clutter and put all of this information in one convenient location. We built these high end custom brochure racks and got the hotels to sign contracts that gave us the exclusive right to place these racks in their lobbies. So anyone who wanted to have their brochure available in the hotel lobbies had to come through our company. It was a big success and that’s where it all began for me,” Hoagland said.
His company expanded their brochure distribution system into four key resort cities then started publishing local tourist and city magazines as well, with their territory stretching from Hilton Head down through Charleston (Hoagland owns Charleston.com) and on to Savannah, Georgia (he also owns Savannah.com). Hoagland started buying the domain names in 1996 when a young friend told him he needed to watch out for the new “Internet” because it could end up hurting his information distribution business. Another “kid” suggested that Hoagland could protect his interests by buying .com domain names representing the cities he operated in. Hoagland took their advice to heart and it wound up being the best move he’s ever made.
MyrtleBeach.com is one of several assets that Hoagland had to fight hard to keep though. The city of Myrtle Beach and the city’s Chamber of Commerce sued him in an effort to take the domain from him. Fortunately Hoagland won the case, one of several that have helped set precedents affirming the rights of private businessmen to operate geodomains. Hoagland said he used what he learned from that fight to help other city domain owners win similar challenges, including a case involving Barcelona.com that followed soon after the Myrtle Beach decision.
Hoagland’s assets are obviously well worth fighting for. Having the city websites has allowed him to keep his print publications strong at a time when so many others are being devastated by the Internet. He is able to offer dual buys (print and the web) to his advertisers in Island Events magazine, Savannah Scene magazine, the Official Guide to Charleston and other publications. That ability to cover all the bases has kept advertisers loyal to him in these times when traditionalists aren’t sure which way they should jump.
Even so, Hoagland said the overwhelming cost advantages of Internet distribution lead him to believe that one day his company will be a 100% online operation. He plans to take a step in that direction soon by replacing his printed Charleston city guide with a new magazine that will be called Charleston.com Magazine, allowing him to use the print publication to reinforce his website brand.
As his websites proved their worth Hoagland started adding more American city domains (either solo or with partners) including Baltimore.com, Honolulu.com, Portland.com, OkahomaCity.com and also went international, landing Cuba.com, Uruguay.com, BuenosAires.com, Geneva.com, Amman.com and Cali.com, to name just a few. He also moved outside the geo space with domains like ChamberOfCommerce.com and CityClassifieds.com (that will serve as the center of a worldwide classified ads network).
Hoagland always bought with the idea of building out his domains and that was something he knew he could not do on his own. “I’m not a technology person nor do I consider myself a good manager,” Hoagland said. So he turned the technical and management duties over to experts in those fields, taking them on as equity partners so they had plenty of incentive to produce. “I consider myself more of an entrepreneur, even though I’ve had my entremanure days,” Hoagland laughed. “But I learned from the failures and you need some of those to be a good entrepreneur. When we started buying these great .com brands that naturally attract traffic we minimized our entremanurial days and had a lot more entrepreneurial success.”
That brings us to how, specifically, Hoagland has fashioned the many partnerships that have allowed him to develop so many different working websites. Anytime there is more than one person in the mix there is a potential for conflicts and hard feelings that can quickly bring an enterprise to its knees. “First of all you have to have the right kind of contract for a partnership. I think, with my 35 years of business experience and the help of a lot of other people, we have developed what I perceive to be the perfect agreement for this kind of a deal and the Internet has made it possible” Hoagland said.
“With a geographical domain we can pretty much define what it costs to run a company in a business like this. We normally create an LLC and we buy the domain with a 50-50 partner, or if I already own the domain name they buy a share of the asset from me. It is very important for everyone that is in business with you to have an equity stake, to have skin in the game and be part owners, not just someone who works for you. As part of the deal we sign a management agreement, because I go into business with people who are management oriented, and that agreement spells out in detail how this management partner is going to run the business and what happens if he can’t run the business.”
“Then there is the really big key which is that we don’t deal with net. The days of net are over – we deal with gross. Net is a word that is used to take advantage of people so you never have to pay them anything. They pay me a percentage of the gross and they get a fair percentage of the gross to be the manager. To give you one example, if we are 50-50 partners, the manager would keep 90% of of the first $250,000 we gross, so they have enough money coming in to run and fund that business. I would get 10%. From 250K-500K, my share would go up to 20%, from 500K-$1 million maybe 30%. Once we get over a million in revenues, the managing partner gets 55% of the gross. The guy who does the work should get the most money. If you empower people to make money and be paid fairly your life will be much more stable and wonderful than it would be if you’re trying to screw somebody,” Hoagland said.
“The name of the game is long term stability. A lot of people are greedy, they try to go for the quick buck and they try to trick somebody. It’s easy to trick someone in a contract but after a few years these tricks become transparent. That’s why partnerships fall apart.”
Still Hoagland said not every domain owner can follow his script because it requires all partners to make a capital investment. “I think some of these guys who have good domains don’t have the capital so I think they will need to do one of three things – 1) sell their asset to somebody who can pull it off because leaving that asset on a parking page is hurting that brand and its hurting the industry. 2) They could try to partner with someone, like a media company, that doesn’t require them to make a cash investment, or 3) or they will have to get an investor to come in and help them out.”
“I do think the opportunities that are going to come to these guys are going to improve as these .com brands get stronger and stronger,” Hoagland said. “More media companies are deciding that they would like to have these brands. So I think a lot of geo domains owners will wind up getting bought out, a lot of us will end up in unique alliances and partnerships for those who know how to negotiate that and others will get some capital investment and be able to pull it off on their own.”
The beauty of a .com city domain is that you can deliver any kind of media (print, audio and video) on it, an advantage traditional local media outlets cannot match. You can offer an unlimited number of services, including things like restaurant and hotel reviews, real estate information and classified ads. Given how much ground could be covered, I asked Hoagland’s partner Mike Ward, who manages Atlanta.com among others, what he thought city domain owners should focus on.
“Each site is unique so you need to study the market,” Ward said. “Why are people coming to the city – is it relocation, business travel, entertainment or tourism? Atlanta has a lot of people relocating there. We have Chattanooga.com and that is more of a tourism area. Each one is very unique. Since Atlanta has so many people relocating we focus a lot on new home communities, apartments and helping people find jobs. In Chattanooga it is attractions and events. So it involves identifying the attributes of each city and providing the content that is required.”
Once you have your site up with appropriate content you need to start earning a return on your investment by attracting advertisers. While Atlanta.com has its own sales staff Hoagland is exploring more efficient ways to have a local sales presence because he knows that is an essential element. “In order to be successful you have to be a real company with a real office,” Hoagland said. “You’ve got to have a telephone and local sales people to answer it. In the markets where we do not have that yet we are not making it happen. So, what we are trying to do is find people in local media companies. The ones I like best are the people with the local city or tourist magazines. They’re easier to talk to and already have an office and sales people, so we go in and offer them from 30% to 50% of the gross revenues to sell ads on our city site as well as provide some local content for us.”
Hoagland said the next best option would be to partner with a billboard operator if the local market has one. If not try local radio and TV stations. He said whoever you approach, be sure you talk to the owner or someone with the authority to make a decision. Hoagland added that newspapers were the least likely partnership option because, despite the dire straits they are in today, most of them won’t co-operate with other media companies. Many are also trying to shift their print business online through their own websites. Hoagland said frankly, “what we are going to try to do with the newspapers, like everyone else, is take away what they have.”
Hoagland obviously has a full plate but there is much more we haven’t even touched on. With his planned EnthusiastSports.com network he hopes to interlink the definitive generic sites for approximately 80 sports (including his own Fishing.com). He has a company called FlipPageMedia that allows businesses to put their brochures online in a virtual brochure rack. Visitors to an area can then pull the brochures they want and print them out on their own printers. He is working with China Springboard on a network of classified ad sites in China and another joint project with NameMedia is expected to be announced soon.
Hoagland also has plans for Cuba.com but has to resolve issues with the government over what can or cannot be done with that site due to the U.S. embargo of Cuba. He is also working with one of his most valued partners, the manager of his company’s foreign assets, Buenos Aires based Gastón Piarrette to create geo networks in Latin America.
Then there is the impending development of all of those geo industry sites with partner Steven Morales. Morales said about a month after he started his blog at SimplyGeo.com Hoagland contacted him out of the blue and suggested some joint venture projects that exactly mirrored Morales’ thoughts on where he wanted to go next. “It was like he read my mind!” Morales said. “One thing I liked is that he wanted to embrace all geo domain owners even if their names were not pure city, state or country names and regardless of what extensions they held. He understood that if you help non .com owners build their assets that only helps increase the value of the .coms at the top. If you are out there helping others, you are also helping yourself.”
Hoagland confirmed that noting, “The little guy is not going to be able to buy an Atlanta.com or Cuba.com or SouthCarolina.com, but they can buy some variations and still create a nice small business for themselves. Opening up to the small guys will make more money for the .com owners too so our sites will be open to everyone. I see this as an industry with tens of thousands of names and owners worldwide in every category and every TLD.”
“There is going to be plenty of room for everyone in the geo space because more than ever it is all about local,” Hoagland said. “It’s about people spending 80% of what they earn within a 20 mile radius of their house. With gas prices headed toward $5 a gallon that might shrink to a 15 mile radius.”
Hoagland currently spends about six months of each year at his Hilton Head home with the other six months in Buenos Aires where he has moved about 75% of his business operations. Bouncing back and forth between two continents while running such far flung business interests doesn’t leave Hoagland with a lot of leisure time. “My life is basically working 80 hours per week these days and when I do get to relax I go fishing in Brazil or Panama and Fly fishing for Bonefish in Turks and Caicos. I am also an avid bird hunter and enjoy the wingshooting in Argentina.”
In the days when he had a little more time on his hands, Hoagland was a competitive sporting clays shooter and over ten years he shot in tournaments all over the world. His interest in the sport led him to found Sporting Clays Magazine and of course he also owns SportingClays.com (and recently acquired Shooting.com).
Hoagland said he spends so much time working now only because he absolutely loves what he does. He considers himself a lucky man and said he never would have gotten where he is today without help from a lot of other people starting with his family, wife Cathy and a sister and two nieces who operate SanibelIsland.com and CaptivaIsland.com. Hoagland added “Also my mom, the most Internet savvy 83-year-old geodomainer on the planet and my dad who taught me to fish and one saying I have never forgotten – inspect to expect. That ranks right up there with my favorite quote from Warren Buffett, “I only invest in companies a fool could run because chances are one day it will be!”