Richard Lau discusses premium domains, forgoing revenue to pivot LOGO.com, and designing businesses for exit.
Richard Lau is a successful serial entrepreneur who is well-known within the domain investing community.
Richard was the first “Domainer of the Year” — before the likes of Frank Schilling, Rick Schwartz, and others who made millions buying and selling domain names.
In the space of 20 years, Richard founded YourNameFree, NamesDirect, DomainManager, and other internet projects that have left their mark on the domain name industry.
Richard also used his domaining expertise to recover hijacked domain names like God.com and Wifi.com.
In January 2014, Richard ventured even deeper into the domain investor community when he created NamesCon. He grew this business into the biggest international domain name conference before selling it in August 2016 to World Hosting Days (now CloudFest).
All of Richard’s business experience was a warm-up for launching companies like Resume.com (exited in June 2018) and LOGO.com.
I spoke with Richard to find out how he starts online businesses, his approach to exits, and why he’s bullish on premium domain names.
I’m also curious about his decision to go without revenue at LOGO.com so he could pursue a larger vision for the company.
Let’s dive in.
Richard, you’ve co-founded several remarkable businesses during your entrepreneurial journey. How do you decide what type of business to start?
First of all, I stay out of anything to do with hard goods because I’m a true believer in the leverage available on the internet.
I love SaaS businesses like domains, stock photos, and online courses because they’re scalable. They are not even in the same world as a brick-and-mortar operation.
If you go from 15 customers a day to 5000 customers a day in a SaaS business, you can handle it by spinning more servers.
On the other hand, if you went from 15 to 1000 customers a day at your yoga studio, it wouldn’t be physically possible to manage.
To your specific question on how I decide; I’ve been buying and selling domain names for more than 20 years. I try to keep one or two domains that I imagine building a business on.
Domain investing is how I came across Resume.com, LOGO.com, and Rides.com.
Another example is when I purchased stock.photo, stock.photos, and model.net at domain auctions. With those domains, I could see myself working with my kids or a business partner, building a business that I’d want to be part of.
I have various ideas for developing businesses and, as I go along, my vision gets larger and larger. For example, stock .photos could be a fun little business, unlike Rides.com which could be a fun large business.
I decide what I want to do at the time. Do I want a fun little business or do I want a fun, large business? I think stock .photos could be five to maybe twenty employees. Rides.com could be 200 to 3000 people.
At LOGO.com, we’re approaching 10 people and within the next 12 to 24 months we’ll more than double that. So I’d say LOGO.com will be an exciting medium-sized business.
What services does LOGO.com provide and why did you decide on a SaaS model instead of a design-service model for that business?
LOGO.com could be many different things. It could be something entirely unrelated to logos. For example, Barrys.com is a fitness company.
With LOGO.com, we drew on our lessons from building the Resume.com business.
We wanted to take a category-defining name and have the organic user experience of delivering what it says on the box. It says LOGO.com, so we set out to deliver a logo.
One could argue that there are several ways a company providing logo designs could build a business. Do you do it with a logo competition? Do you do it with custom design services that fetch $15,000 per logo, or do you do something else?
We launched in 2018 and for the first three years, we were simply selling logo kits. You would log in, design your own logo, and pay us a one-time fee of $20, $60, or $100 for your high-resolution logo files.
Earlier this year, we took another look at that process. We thought we should provide the logo files for free and only charge for ancillary services. We decided to gamble on that business model.
It was very difficult to take every LOGO.com expense — with seven employees here in Vancouver — and then cut revenues to zero.
That was definitely a moment of pause in our business life, but the aim was to differentiate ourselves. We didn’t want to be seen as just a logo makers.
We also realized that we would not survive if we charged people a one-time fee and never contacted them again, so we decided to give the logo away for free and offer a subscription instead.
We spent three years creating a beautiful logo maker that’s as good or better than our competitors. Now, our job is to create additional tools that justify the monthly fee.
All our users get $100 value for free — no strings attached — and then some of those people will pay $10 a month for our other tools.
At that point, we know your logo and your brand colors. When you need to make social media posts, invoices, business cards, profile pictures, or anything like that, most other online tools ask you to pick a template, add other elements, and drag your logo over. Then you have to try and tweak the template to match your brand colors.
Our service is more streamlined because we automatically populate the graphics based on the logo you’ve already created. There’s no tweaking required.
With that $10 a month, we deliver $100 of value. We want our customers and users to be shaking their heads, wondering how we offer all of these tools for only $10 a month.
How did you master building such a diverse set of companies?
I surround myself with smart people.
My initial idea for NamesCon was to organize a very small conference for around 60 people. However, when Jodi Chamberlain and Jothan Frakes came in, they helped to develop a much larger vision.
I’ve built various businesses with my business partner, James Morfopoulos. He is the co-founder of LOGO.com, and he definitely works more inside the business than I do.
It’s hard to find people to work alongside you as a partner, co-founder, or project lead. You have to be sure of the person or test the waters with your partners.
Do you have an exit strategy on day one? When do you decide it’s time to sell a business?
I actually did a presentation at NamesCon in 2020 on that. The title was ‘Designing Your Business for a Successful Exit Strategy in the Future.’
It’s exactly what you need to think about before you start a business before you incorporate before you have your first customer and vision.
What is your exit strategy? And, for some people, the exit strategy is no exit.
Let’s say you’ve just graduated from university and you’re going to be a physical therapist. Is your goal to have a practice that you work in for the next 20 or 30 years? If so, then set it up that way. If your strategy is to open up multiple clinics, then set it up that way.
If your goal is to wing it, then go and work for someone else and have that as your strategy. Don’t blindly hang your shingle on the door and see what happens. That is not a strategy.
When we started NamesCon, we knew that we wanted to sell it within three years — and we did. When we started Resume.com, we thought we would sell within five years. It took seven.
We think that, sooner or later, we will sell LOGO.com to a much larger player.
But when we started, we knew we were going to sell. We’ve designed everything around that strategy — right down to the fonts we use.
We’re going to make sure that when a potential purchaser looks at us and does their due diligence they’ll be happy with all the paperwork that backs up how we have built our business.
You want to avoid going back to someone you hired four years ago, on say, Fiverr and asking them to sign a document because you are selling your company for $20 million.
I am not saying don’t hire freelancers. By all means, do, but ensure you have your paperwork in order.
What is the best way to sell a business? For example, would you use a broker or marketplace or do you suggest targeting buyers?
I definitely think that marketplaces have their advantages. Generally, I would say they are for businesses selling for less than a million dollars.
If you’re north of that number, then you should use a business broker.
A broker won’t necessarily find a buyer, but you need someone alongside you to take the emotion out of negotiations and help you think of things that you might not have thought about before.
You’re in the business of building your business. Brokers are in the business of transacting businesses. Don’t think that you can do their job. Even when we are selling a business to someone we know, we want a business broker in our corner.
You don’t go to court and represent yourself so you shouldn’t represent yourself in a business sale either. A broker will assist you in all aspects of the transaction.
Have you ever considered buying a business for low six figures and then growing it to a multi-million dollar valuation? Or have you always looked at new domain names that you could build on from scratch?
Yes, I have.
We haven’t done it, but I wouldn’t say that we won’t do it.
For example, face.com is a domain we’ve had for many years and we have several ideas for it. We are looking at a few different businesses we could purchase and put underneath that name.
What put us off in the past is that either the software we were looking to buy wasn’t properly put together or properly licensed, or it wasn’t documented well enough. These things often happen when the code is written by a single person with no exit strategy.
But, as I’m seeing more and more startups get themselves to decent revenue, where they raise money and make a brand change, I am getting comfortable with the idea of taking a fantastic domain name, raising some money, and saving myself 6-12 months by buying an existing business.
With LOGO.com, we built everything from scratch and it took us a good two years. If we had raised money and simply bought someone else out, we would probably have saved a year and a half.
You can find some impressive software on Product Hunt. I think that taking some of those products and marrying them with the category-defining domain that the product is trying to serve is a potential recipe for success.
If I was in my 20s, I would get on Product Hunt and also create a relationship with a company like Venture.com. I would figure out what product I could marry from Product Hunt with a domain name that I could rent from Venture.com and then put those things together with outside financing.
I would upgrade the purchased business name from something like FreeBeats.XYZ to Beat.com. I think there’s a massive opportunity just to work your network and not necessarily use any of your own money.
What specific advantage do entrepreneurs get by building a business around a premium domain name?
I don’t want to come off as too biased, but I’ll be blunt. People are absolutely stupid and short-sighted when they launch a business on a brandable domain name that doesn’t match what the business does.
You can set up a Subway franchise in the middle of nowhere and pay for billboards along the highway that get people to exit and drive two miles to your location. Or you can set up on a corner where 10,000 hungry people walk by daily. Which do you think is better?
I have conversations like this with VCs, but I put it more diplomatically.
If we’d tried to launch Resume.com on something like resumeriver.com and execute our game plan, we wouldn’t have been successful. I could have killed myself for 10 years to maybe get a fifth of the traffic we got on Resume.com.
You stand a better chance if you take a category-defining domain name and you produce a product that’s as good as your competitor.
When you’re coming up in a Google search, human nature dictates that you get clicked on more often. Google may be neutral, but people will look at your domain.
They’re going to say, well, am I going to click on Resume River or am I going to click on Resume.com? Experience has shown they’re going to click on Resume.com.
Human behavior shows you will click on a premium domain name more often than a non-premium domain name. So, if you have the opportunity or ability to build on a premium domain name, you make a mistake if you don’t.
If you think the star power of a premium domain name can be replaced, by paying for PPC, you are making another mistake — and you’re flushing money down the toilet. I think AdSense and PPC ads have a strong role to play, but not like this.
Is it easier to get a response when you send a cold email from a premium domain name in your day-to-day business?
For the same reason that an anonymous user is going to click on the premium domain name listing in the Google search results when you message someone on LinkedIn from @resume.com, they’re going to respond to you. But again, if I’m reaching out from @resumemountain.com, they’re going to think I’m spamming them.
A few years ago, when I ran Resume.com, I was heading to the ICANN conference in Santa Monica. Since ZipRecruiter is in LA, I decided to message their CEO.
I’m not a connection, but I sent a short message introducing myself as Richard from Resume.com, saying I would be in town next week. I got a response within 20 minutes — with approval and their CEO’s calendar link.
I guarantee that if I’d sent that request from anything other than Resume.com, I would not have received that response. They didn’t buy us, but still, it shows the power behind a premium domain.
I would not build on — and would hesitate to invest in — a company that does not have a premium domain.
Speaking of powerful domain names and looking ahead, will the new HNS / Web3 domain names offer any advantages?
It’s early days and I feel like the elder person in the room when people talk about HNS.
Having said that, I do have a two-letter handshake domain.
We saw sparks flying at NamesCon 2022.
This surprised us because, in the domain industry, we are very cooperative and friendly, whereas, in the crypto world, there’s a lot of trolling, flaming, and antagonistic personalities. One side is happy-go-lucky and the other side is adversarial. I think that’s what we saw at the conference.
Still, I know these people and they’re all good people. They’re just passionate about their products and visions for that space.
When talking to these individuals (which I did), you appreciate that they’re putting their all into it and, because of that, it’s not going to just fizzle out.
There’s a need that they’re looking to fill. As long as the new handshake and blockchain domains are not recreating ICANN, they’re going to serve a purpose.
The question is, can they serve their purpose without recreating an ICANN? ICANN is kind of the one that prevents collisions. Can you imagine being able to buy a domain name without having to pay renewal fees?
I take more of a spectator role, not a speculator role. I’m not at all an expert but I do see a future for blockchain domains.
The thing is that I’m on a timeline. I’ve got so much on my plate with my legacy domain name investments, the development of my current domain names like LOGO.com, and future domains like Rides.com. I’m 52 now so I’ll leave that for the next generation.
Richard has had an incredible business journey so far, and, as you can see, he has no intention of stopping.
Will he build his next project on Rides.com, Face.com, Hockey.com, or another ultra-premium domain name he decides to purchase?
We can’t answer that today. What we do know is that Richard will continue to invest and build diverse and successful businesses.