Below is the written transcript of our discussion last week with Colin Campbell (CEO) and Jeff Sass (CMO) of DotClub Domains, concerning their application for .CLUB and recent victory at the first private auction for a top level registry.

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Howard Greenstein: Hello, welcome to Internet Law Talk for Thursday, June 13, 2013. I’m Howard Greenstein and with me is David Mitnick, President of DomainSkate. How are you doing today?

David Mitnick: Very good, very good. Thank you.

Howard Greenstein: All right. And with us today, our guests are Colin Campbell, the CEO, and Jeff Sass, the Chief Marketing Officer of DotCLUB Domains, the winners of the first private auction for the New Global Top Level Domain, DotCLUB. We’ll be taking your question today via Twitter. You can tweet us @DomainSkate; or you can call in with a question. It’s 1-347-2059963. That’s 1-347-2059963. Colin and Jeff, welcome to the show. Thanks so much for coming on today.

Colin Campbell: Thanks for having us on.

Jeff Sass: Thanks, Howard; thanks, David.

Howard Greenstein: Great. We’re very glad to have you. Do you want to give us a quick introduction of who you are, a little bit about your backgrounds, just very briefly so people know who you are, and they know what’s going on here.
Colin Campbell: Okay. I’ll just take it up here. This is Colin Campbell. I’m actually a bit of an Internet junkie. I started my first company in ’93. Tucows was that company. Myself and some partners, we launched that one. After we sold that company, we did another company called Hostopia which does all the hosting and email for the largest telecoms in the world. And then after that, we did a company called Geeks for Less which has programmers in several countries in the world. Years ago, we thought about the whole New gTLD space, saw it unfolding and thought of all the names that really stood out the most, DotCLUB seemed to be the one. That’s where we are now. Jeff?

Howard Greenstein: Fantastic.

Jeff Sass: Great. And this is Jeff Sass, and I’m the Chief Marketing Officer for DotCLUB domains. My background, I’ve actually started my career in the entertainment industry and then moved over to technology and I’ve been involved in a number of tech start-ups here in South Florida. I was an early player in the mobile commerce field with a company called way back. And then I’ve done also done a lot of work in the social media space and I’ve worked with companies including Gapingvoid and others. I met Colin about, coming up on almost a year-and-a-half ago when he told me about his vision for DotCLUB and the opportunity to get the domain name. And it’s been an exciting ride between now and then to the point we’re literally, just this last week as Howard mentioned in the intro, we completed a private auction and actually obtained the rights to move forward with the DotClub name which we’re very excited about.

Howard Greenstein: That’s great, guys. So what’s the present activity? What’s the very sort of top line summary of where you’re at right now around the DOTCLUB registry that you obtained?

Colin Campbell: Well, you know, first thing I should say everything is still subject to ICANN approval and all that stuff. But we’re no longer in contention. So as some of the listeners may know, ICANN, the organization that operates all of the domain name space, opened up the floor for people to apply for new top level domain names. So instead of .com, .biz, .org, you could literally apply for any name that you wanted to provided you pay the hefty application fee. And if no one else would apply for that name, then you are in a good position to get it. However, for more popular names, multiple companies may have applied for the same name so they were in contention. And we were in a position where there were two other companies who had also applied for the DotCLUB name so none of us could move forward until that contention was resolved. And it was resolved last week in the form of a private auction between the three parties involved. And we were the ones who came out of that auction victorious. So now this just happened and now we’re able to go forward, complete the process with ICANN, and begin the process of marketing the name and getting our plans to go forward aggressively.

David Mitnick: Wow. So you guys have had a pretty busy couple of weeks here. And I’m really interested to go back to talk about the private auction and how it went and you’re strategizing and thinking around it. This is the first one. It must have been – this is a whole new territory. How did you guys attack this?

Colin Campbell: Yeah, it’s interesting. I’ll take you back even a little further here to about a year, a year-and-a-half ago when – actually about a little over a year ago when the process was opened up and individuals and companies around the world had the opportunity to apply further on gTLD. I think really, now that we’ve got it I think I can talk a little more openly about the strategy. But at the time, it was really about demonstrating that we are the most competent and likely company to launch the DotCLUB domain name. And because of that, we know a number of our companies that were in competition with us decided to back down. We did have three companies though, and one of them was a very large company that applied for 307 names and has raised well more than $100 million. We’re up against them and we’re up against the law firm out of Northern Canada which we thought was a bit unusual. But, you know, in getting to talk with both of those companies, they each have their own respective business plans. And it was really just a matter of getting the three of us together to agree that we should keep the money in the industry and have a private auction. We really strongly believe even if we were to lose the auction, the money would stay in the industry because actually the rules were that the loser gets the proceeds from the auction so that it can go out and acquire another domain name. But obviously we’re very excited we got DotCLUB. We think it’s very unique, very special. And it’s something that will resonate around the world as a worldwide domain name.

Jeff Sass: And what’s interesting about the DOTCLUB story is that like the two companies we were in contention with, many companies have gone after multiple domain names so they’re going after sort of a portfolio play with they going after a lot of names. From the beginning, we’ve had a singular vision that involved just the DotCLUB name. So we’ve always been interested in just that name because we really believe that the word ‘club’ has inherent marketing value. It actually means the same thing all over the world so it’s got global recognition and global meaning. And we have a business plan around the DotCLUB name to really help any type of club or organization or people that have a passion about something to come together in the form of a club. And it’s not just about the domain name, we’ll actually have a suite of software and services behind that to make it easy to manage and organize a club. So our vision was always very much about this singular domain. We’re not a domain squad or we’re not trying to build up a portfolio of dozens of names. We’re really focused on the DotCLUB business.
Howard Greenstein: You seem to interpret the term “club” as pertaining to any organization where people get together and not just like a nightclub or a private smoking club?

Jeff Sass: Well certainly all of those fall within the description of people coming together most certainly. So I mean obviously any expression of “club”, whether it’s a group of people with a common cause or whether it’s people hanging out at a nightclub together, it is about people gathering together. And so we think what’s exciting about club is it is so broad that it includes all of those types of communities, whether it’s a literal nightclub or whether it’s a group of people with a shared interest forming a club that they meet together about or just communicate online about. So it’s that broad, and that’s one of the reasons that were excited about it. And while it’s broad, it’s also focused because it is about that type of community. It’s about bringing those people together, bringing the tribes together.

David Mitnick: So I’m interested. We’re sort of talking about some of the future plans, and one of the things that’s been discussed a lot around the news these days, the concept of innovation and some things that these new registries could bring to the table. Without kind of giving away the entire business plan, I know you’ve got a lot of it probably still coming to you, what do you guys see as innovation, sort of the in that clause for people who are going to be using the registry? And what are you excited about doing?

Jeff Sass: It’s a great question, and I think it’s really important because this is sort of like the second of the Internet coming and you’re really going through a major change that most people in the public aren’t really fully aware of yet. You have just a handful literally of domain names today to choose from. And over the next year or so, that’s going to dramatically change as all of these new TLDs are introduced into the market. So some of that innovation is going to come by people realizing that domain names and a good domain name has a lot of value in areas, not just about starting a company, right? It’s not just about finding that perfect domain name for your business. It could be about finding the perfect domain name to express your passion about something, to bring people together. And that’s where club fits. One of challenges is really the fact that this is such a dramatic change that people have to understand that these new domain names are available. Some of the ones that come to market early may not be that great quite frankly because we mentioned the contention process, so obviously the more popular names have many companies buying for them. And that’s going to slow down the process of those names coming to market. So the names that may come to market faster are the names that only have one company going after them. And in some cases, those may not be great names. So the public has to understand that there’s a whole new wave of names coming. Some are going to be extremely valuable, some not so much. And I think the ones that are innovative, innovative in the way they market to the public, innovative in the way they show that there are new ways to utilize and benefit from a very special domain name, they are going to be the ones that will succeed.

Colin Campbell: I definitely understand a lot of the skepticism in the market. The market today about the gTLDs and a lot of – it will cost corporations a lot to try to protect their names. I do think that there are a lot of great verticalized top level domains. Domains like .wiki or .chef or even .club that mean something different than .com or .org, I think we’re already well-served today by .com. So the question becomes why the gTLDs? Well, the reality is, it does open up the space in different verticals and allows individuals or organizations, companies to represent themselves in a very different way. When you handle the word ‘club’ on the back of your website or address, it creates a completely different meaning than if you were to add the word ‘com’ onto it. So for instance, it has a very different meaning than Being part of the club or being part of that website, club, really provides that affinity connection to the users that you might not get from a .com or a .org.

David Mitnick: Sure. Related to that, talking about search, from where you guys are sitting and obviously every user and registrant will be different, do you see – when people are going to ask you about .club in search and how they’re going to be found, what do you see as the sort of efficiency in terms of search and the ability to sort of maximize SEO with .club or any of the new registry for that matter?

Colin Campbell: You know, we don’t really have the answer to that question. I mean really obviously Google has the answer to that question, Yahoo!, and Bing. But that being said, I mean Google’s always talked about “Do No Evil” so if they believe, and I truly believe this, if they believe that certain websites that represent something, like if a verticalized TLD represents a particular group or segment in society, and if they can get a better search result ultimately by accessing those top level domains differently than a .com where it’s generic or maybe a .web where it’s generic, I think that Google – you know, Google want a better experience and ultimately having verticalized TLDs will cope with that user experience.

Jeff Sass: By definition, when Colin talks about verticalized TLDs, it really means that they are likely to have very relevant links because the people who are going to be interested in a .club name are going to be clubs and organizations. So the results and the links will be very relevant which typically is a good thing to search, not a bad thing.

Howard Greenstein: Exactly. So as you guys consider examples of innovation in the top level domains and we’ve seen things like I believe the XXX folks have a search engine that only searches XXX. Not that I ever go and look there, but the question I guess is, if you look at say .co as an example of some folks who’ve been pretty successful and have taken on a very hands-on approach to working with their customers and when you think about – take out the content but think about the innovation of having a search or something like that but only goes through a particular domain, do you guys have anything that you’re talking about yet or thinking about as to how you’re going to make it special for organizations who take a .club domain?

Jeff Sass: Yeah. I think from our perspective we mentioned a little bit before is our vision for DotCLUB is to not just be the registry for the domain names but to also offer a software platform that’s designed to make it easier to find, create, and manage a club. So we’re going to be offering this platform and services along with the domain name. And we think that that’s very innovative and it’s going to make it really easy for kind of a one-stop shop for anyone who’s got interest in a particular thing to form a club right away very easily – getting a great name, getting a platform that’s got social capabilities, membership management capabilities, and everything else. Colin mentioned that he was one of the founders of Hostopia. He’s got a great background in building these types of online platforms. And we’ve got a team that’s really ready to do this and very excited to do this in a big way. So I think that’s something that we’re trying to do that we believe is innovative around the DotCLUB domain.

Colin Campbell: For us, it’s all about bringing people together with similar interests in a social environment.
Howard Greenstein: And so when you look at some of the ways that .co has done its marketing, how do you see yourselves being able to get the word out to consumers and to others who might be starting clubs to just say, “Here we are. Hey, this is something that you should be paying attention to”?

Colin Campbell: Clearly, we have lot of marketing to do ahead of us. But I think also a lot of it will be through partnerships and associations with prominent clubs and organizations that can make valuable use of the DotCLUB name early on, so-called Founders Club of organizations and companies that get on board early with us. And we’ve already had some discussions with some. So this is the very beginning. We’re literally a weekend to actually having the domain. But there’s no question that you’ll see a lot of marketing, both traditional and non-traditional, from the DotCLUB team to get the word out.

David Mitnick: It’s pretty easy to see or imagine a lot of the excitement around DotCLUB for organizations wanting to create a really special presence for themselves. I’m wondering, on the flip side because I worked for a long time in the IP protection area for a lot of Fortune 500 companies when I was practicing law, and you’re both right when you talked about that there’s a lot of skepticism about these TLD process initially from, particularly from big, big companies. What, in terms of brand protection, is there anything that you guys are thinking about as far as providing – obviously, there’s things at the Trademark Clearinghouse that the new registries are going to have to be doing. Is there anything else that you guys are bringing to the table that will allay fears of rampant cybersquatting and things like that?

Colin Campbell: I think the key for us is we’ve got an ICANN process that we’ll follow very closely which includes a sunrise period. I believe our sunrise period was extended even longer than some of the other applications. We truly believe in recognizing, understanding, and working with the companies today to ensure that they protect their name and that no one infringes upon those companies. Obviously, we’ll set in place the procedures that we’ve outlined in the application. And we’ll work closely with the companies to get the word out to try to ensure that they have the opportunity to pre-register their domain names in that sunrise period.

David Mitnick: Got you. Going back to the auction for a second, I have to ask you, you guys, you made mention of one of your competitors that’s very, very heavily funded. So I guess I have a couple of questions around that. First, when you found out that you were in contention with them, did your heart kind of stop for a second thinking how much money that they’ve amassed for all of their applications? And also just sort of take us through the process, what was it like? Was it really, it must have been nerve wracking?

Colin Campbell: It was. I’ll tell you, Jeff and I had to go through the last 18 months of our lives working on this project. Some people say we’re obsessed with it. We’re maniacs, just singular-faced, just laser beam-focused with respect to winning this domain name. And you’re sort of a David versus Goliath here. They’ve got all the money and they’ve got all the people, the money, and strategy. And here you are, you’re one guy and a little bit of some help and you’re trying to – you’re one company and you’re trying to get one domain in. You know, ultimately I believe the – what’s challenging and just we went from day to day, we had to raise additional funds in order to win the name that actually was a process that occurred 30 days prior to auction. Had we not had the additional funds, I don’t know if we would have been able to succeed in the bidding process here. Not only do you have to deal with the whole regulatory issue in getting through the ICANN process, but you also have to – you obviously have this auction process and you know you’re not going to be able to walk away with a property like this, a top, top level domain. You’re just not going to be able to get it without really making a substantial investment into it and putting yourself forward. So we filed the Reg D, and we raised $7 million over the last 30 days. So just that process alone for anyone was very stressful.

Howard Greenstein: Right.

Colin Campbell: You know, trying to explain to potential shareholders that we’re raising this money and we may or may not get the domain, so it was a bit of a challenging offering with all of our competitors knowing what we’re up to as well. So you can imagine. We didn’t use a broker. We just simply – I used connections that I had personally with my prior investors in other companies and we were able to put it together and make it happen.

Jeff Sass: And I think, you know, it was an interesting process, because as Colin alluded to earlier that early in the game we were very vocal about our desire for DotCLUB in the hopes of keeping out potential competitors. And so on the one end, we were up against a company with substantial resources and who applied for 300-plus domains. But by the same token, we were only up against two. There are many domains that have seven or eight people in contention. And included in those parties are companies like Google and Amazon who obviously have tremendous resources that have applied for lots of names. So on the one hand, we were disappointed to be in contention with a couple of companies; but on the other hand, we were happy that it was only a couple of companies and not the likes of Google and Amazon as well. So in the end, we managed the process and we were – The auction process itself worked out well. Obviously, we’re happy with the result. But it also worked out well because we were able to bring things to a head and get closer on this issue sooner rather than later because time is of the essence. It’s going to be a long process of new domain names now being introduced and we really wanted to be among the first to come out. And as it stands now, we believe that DotCLUB will be among the first really top 50 domain names to come to market. So we’re very excited about that.

Howard Greenstein: Very exciting. Did you have from ICANN I think sort of an indication of now that you’re out of contention, how do you get in to evaluation process and how long it’s going to take for your particular application?
Colin Campbell: Yeah. The way the process has worked for all of the applications is that you had to apply by a certain date last year. Once all of the applicants had applied and met their deadlines in their application, you knew who you were in contention with. At that point, GAC – which is Government Advisory Committee – of ICANN reviewed all of the applications. They have 527 GAC advisor, GAC warnings around a number of domains in a number of different areas that they would like to see the domains regulated. They had to go through that process. Fortunately, DotCLUB is not one of those domain names. It’s an open TLD and doesn’t have that regulation attached to it, which means that we can broadly distribute it through registrars like GoDaddy and Tucows and others. So we’re very pleased with that. We also had gone through a process whereby anyone could object for pretty much any reason. We’ve gotten through that without any formal objections as well or no objections from the ombudsperson at ICANN. We’re very pleased we’ve gotten through that. We did the application. Now the next step really for us is to sign the registry agreement and we will likely do so once that has been finalized and our turn in the queue comes up to just sign it.

Howard Greenstein: That’s really, really exciting.

David Mitnick: Yeah. I’m curious going through when you guys, when you agreed go through and have a private auction. Was there any concern about the legality of a private auction or any discussion about it?

Colin Campbell: No, there’s no concern about that.

Howard Greenstein: Okay. And I’m just curious when you went on a road show and you told investors, “Hey, we’re going to get a top level Internet domain that’s going to be different from .com and .net, and it’s going to be DotCLUB. And we want X number of hundreds of thousands or millions of dollars,” what was their response? Were they understanding where the value is going to be in this new top level domain world?

Colin Campbell: You know, I have to say it was probably one of the – you know, I’ve raised money, I’ve done an IPO, done the road shows, several of my companies passed the raise, we’ve done private equity, venture capital.

Howard Greenstein: You’re a veteran here.

Colin Campbell: This particular company and this particular race was honestly one of the easiest races we’ve ever done. And I never used a broker or we used some overseas lawyers to set up the documents and the private placement memorandum. And we had almost – we we’re way over-subscribed by the time we closed it. It was not a matter of getting the money, it was the matter of letting people down that they couldn’t get into it.

Jeff Sass: I’d really give a lot of that credit to Colin and his vision for DotClub because again this wasn’t a portfolio play. When this was presented, it was presented with a very clear passionate vision for the value and the potential of the DotClub name. And I think that that resonated very well with our investors.

Howard Greenstein: Fantastic. So we’re coming up on three minutes left in the show. Just any sort of final thoughts on what we’ll be seeing from you guys in the near future in the DotCLUB world and any thoughts on what you’d like to leave people with when they’re thinking about it?

Jeff Sass: Well I think you know the real question is bigger than just DotCLUB in terms of the immediate future. I think it’s really important that everyone who’s involved in this new top level domain area makes sure that they’d do everything they can to educate the public properly and educate businesses properly on what’s really happening and what is the value of this sort of new way of the world in terms of the Internet because all these new names are coming and we of course are going to be singly focused on presenting the value of DotCLUB, of really getting the word out to anyone who has a passion about anything that there’s a great opportunity now to turn that passion into a club and of course the existing clubs and organizations. But the bigger picture too is to let people know that this is a new chance to start over. Lots of people over time got into the DotCom game or the name game late, couldn’t get the perfect name they wanted, couldn’t get the perfect URL or email address they wanted, and now here’s a wonderful opportunity to really reboot and start over and really get something that’s of tremendous value, whether that’s DotCLUB or some other new name. So I think it’s an exciting time for the Internet space as a whole and exciting time for us specifically.

Howard Greenstein: That’s great. And I’m looking forward to seeing what you guys come up with and how it moves forward. So again, thanks to our guests, Colin Campbell and Jeff Sass, the CEO and CMO, respectively, of DotCLUB domain. And look for DotCLUB in your Internet browser coming up soon. This is the Internet Law Talk podcast brought to you by domainskate. I’m Howard Greenstein with David Mitnick. And look for us again on June 27th at 2PM Eastern time for our next Internet Law talk podcast. And again, thanks Jeff and Colin. And have a good day, everybody.

Jeff Sass: Thank you, Howard; thank you, David...