May 4, 2010 » DomainInvesting.com
Lend.me

Oversee.net & Snapnames File Lawsuit Against Nelson Brady

3

I just received word from Oversee.net that the company has filed a lawsuit against Nelson Brady in federal court in Oregon. Back in November of 2009, the company alleged that an employee was caught shill bidding on the Snapnames domain auction platform under the “halvarez” bidder id. The lawsuit seeks over $33 million in damages, including punitive damages.

The news release follows:

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SnapNames, and its parent company, Oversee.net, have filed suit against Nelson Brady in federal court in Oregon.

Brady is a former employee who, under the false name “Hank Alvarez,” improperly bid in certain SnapNames auctions.  In some cases, Brady also embezzled funds from Oversee by fraudulently refunding himself a share of the purchase price for names he won.

For several months, the company has in good faith attempted to settle privately with Brady to recover its losses, including the rebate fund established by Oversee to address Brady’s activities and the funds he embezzled from Oversee.  Those settlement efforts have been unsuccessful.

The suit seeks over $33 million in damages, including punitive damages.

Context

  • In October 2009, Oversee discovered an employee, Nelson Brady, using an account under the false name “Hank Alvarez,” engaged in improper bidding activities in domain name auctions on the SnapNames platform.
  • Oversee and SnapNames disclosed the situation to its customers and employees in November 2009.  Oversee made available to affected customers a cash rebate in the amount of overpayment, plus 5.22% interest (the highest applicable federal rate during the affected time period), of any amounts paid exceeding what the auction price would have been without employee bidding.
  • Since that time, more than 60% of the aggregate rebate amount has been claimed.

Impact of Brady’s actions on auctions

Brady’s conduct affected:

  • 5% of auctions since 2005
  • 75% of total impacted auctions were between 2005 and 2007
  • Less than 1% of SnapNames auctions during this period were won by the employee
  • The remaining 4% were won by SnapNames clients.
  • Brady’s bidding affected approximately 1% of SnapNames’ auction revenue during the full period.

Impact of Brady’s actions on SnapNames and Oversee

Oversee will be demanding millions of dollars from Brady for the damage he caused to Oversee and SnapNames.  No amount of money, however, could compensate the damage Brady has caused to SnapNames’ and Oversee’s reputation in the marketplace.

Law enforcement

In November 2009, Oversee voluntarily disclosed Brady’s conduct to both the US Attorney’s Office and to the Federal Trade Commission.  Oversee will not publicly discuss anything relating to law enforcement matters.

Customer Service

SnapNames customers who have questions about the rebate offer can contact the SnapNames support team:

On the web:                http://snapnames.custhelp.com
By e-mail:                     support@snapnames.com
Phone:                         +1 (866) 690-6279 (toll-free in the U.S.)
+1 (503) 241-8547 (outside the U.S.)


Niche Websites

Pulling Back the Curtain on One of My City .com Websites

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I think I share quite a bit of information about my business with people who read my blog. In my own opinion, it’s one of the primary reasons why people return to my blog daily, as I am not only talking about doing things, but I am actually doing the things I talk about.  Basically the only thing I won’t discuss on my blog is my revenue because I make a very good living, and it’s frankly not your business to know how much money I make :)

That being said, I read about SanDiego.com, and I thought I would give you some insight into one of my geodomain websites to share how it’s doing. I am keeping the domain name out of the post, as I don’t want to draw attention from local competitors who probably have a variety of Google alerts, but if you’ve read my blog for more than a couple of days, it should be very easy to figure out.

Below is some information about the domain name, the traffic, its revenue, cost…etc.  Just some things coming from the top of my head. It’s one of many projects I am working on, and I will discuss my thoughts on expanding below the numbers.

  • Traffic has been over 10,000 uniques a month for about a year.  It had close to 18,000 uniques in March.
  • There are a four paying advertisers on the newly re-launched site (launched a couple weeks ago)
  • Top banner costs $600/month (with a 100% rotation), the smaller banners at $99/month, and the side banners at $199/month
  • Hotel and Restaurant listings are $199/year
  • Job listings and clicks on the job board generate around $100/month
  • I earn somewhere around $7-10/day in Adsense although I haven’t checked in a few days
  • Yellow Pages listings are $99/year, although I haven’t actively looked for YP advertisers yet
  • Beginning in 2 weeks, I will have a local sales representative working on a 100% commission basis
  • My fixed developer costs  were a few thousand dollars for the entire site (doesn’t cost anything on an ongoing basis) and I pay about $50/month for hosting
  • I don’t pay for content. All articles are either written by me or user submitted
  • I spend between 30 minutes to an hour on the site daily, including Facebook and Twitter to promote the site
  • I don’t spend any money on bringing traffic to the site
  • The domain name alone cost $50,000 paid all in cash
  • There is no debt owed for this site (or my businesses in general)
  • Total revenue is in the ballpark of $1,000/month for the site right now.

When it all boils down, I run a very lean operation here with very low fixed costs monthly and very little overhead.  I strongly believe I will be able to make at least $30,000 a year in revenue within 2 years, keeping things as lean as they are now and just picking the low hanging fruit.  All that revenue will go to my bottom line as I don’t have anyone to pay. Traffic continues to grow, and I think the site being on WordPress is very helpful. Keep in mind that as traffic grows, advertising costs will ramp up.

There is a huge opportunity in the future, although I don’t know if it’s worth the risk. In this city, there is just one newspaper. Compare this to another city .com name I own, where the city has 1/3 of the residents but 4 local newspapers.  The problem is that it will cost a lot of money to hire journalists, photographers, developers, sales people, creative staff, lease office space, buy office equipment…etc.  I probably would have to finance it all with loans, and in the end that is a gamble. I suspect it would take close to $500k just to start the process of turning the site into a newspaper – and that’s a conservative number.

One of the biggest challenges I personally have is knowing when to ramp something up and when I should keep things small. I was lucky enough to be able to ramp up the revenue on my blog, otherwise I wouldn’t be able to spend the time to do it.  Simply put, I would be hurting my other businesses by working on something that wasn’t making money.  With my blog though, ramping up meant that I needed to reach out to contacts to find advertisers, which has been the easy part. This will be a challenge with the city .com site, as I don’t live in the city and don’t have many contacts.

With my city .com websites, I think at least two of them could eventually compete with the big newspapers, but it would be a gigantic risk.  At the end of the day, I don’t need to make them huge sites and can do well with a few small websites, but there’s always the lure of becoming bigger and growing my company.

As they say, it takes money to make money, and sometimes you need to borrow money to make it big. Many people either would prefer to take risks with investors’ money or they just don’t have the capital to do it alone, and that’s a big gamble. For me, I don’t think that’s going to be an option.

At the pace I am going, it will be a while before I make my money back, but I am confident my geodomain names are worth what I paid in this case, and worth much more than I paid in the other cases.


Niche Websites