Best Laid Plans of Mice and Men

Anyone have $300 million?

On the plane ride back from the Domain conference, I had this idea. Why not add to the flywheel of business by buying the best domain portfolios? Not only would they be very valuable assets in and of themselves, but they could be monetized and garner even more revenues at scale. This would be like buying up more waterfront real estate.

I could pitch the top domainers, who had become great friends, Frank Schilling, Scott Day, Garry Chernoff and others. Webdesign.com, recipes.com, prayer.com, performance.com(the one I thought I had for $100 when I first started).

But where would I get the money? Again, I didn’t have the cash on hand to do this.

Then I had an idea. I could invite all the top investment bankers from Wall Street and see if I could either raise or borrow $300 million.

The Players of Wall Street

I asked my network to introduce me to anyone who could help me. Bob Seeman, one of my innovative business friends, connected me to some along with my lawyer, Steve Lukas, who would connect me with Scott Earthy, who came from this world of finance.

I was planning to move into our newly acquired Yaletown building, but the renovations would take too long so instead we upgraded our offices to an 11,000 square foot sub penthouse office in our existing building, with 270 degrees of city, water and mountain view. Much too large for our team of 16 but we would grow our team to 60 as we built the infrastructure to scale our business.

Pretty soon, we were hosting all the big Wall Street banks. I really wanted Goldman Sachs, but they were the only ones I could not connect with.

I would even be invited by big private equity (PE) companies like Cerberus and Blackstone. Cerberus offered the $300 million right away on our first meeting but at a higher interest rate. They were the PE that had acquired Chrysler.

And just like that, I was on my way to do the deals I had already lined up with my domainer friends.

The cover story coincided with the meetings and validated the story of our business and I was viewed as an entrepreneur who could deliver the goods.

I presented to S & P and Moody’s to get investor ratings and that was the ticket into this world of Wall Street. In the elevator before the pitch I saw a guy staring at me. When I looked up, it was John Travolta! Hi John. Hi. He seemed normal, but also mystical at the same time. Wow, a whole new world.

The Subprime Crash of Real Estate

Out of the 7 investment banks, I was impressed by Bear Stearns and Bank of America. I liked their team. Maybe it was my first amazing meal at Nobu that BOA treated me that won not only my stomach but my heart.

There I was sitting in the Manhattan tower that housed Bank of America, overlooking beautiful Central Park. The head of leveraged finance was popping in and out of the meeting. But what I noticed was his very stressed and concerned demeanour. He seemed very distracted with bad news. At the break, I asked him, “What’s wrong?”

He simply replied, “Subprime.”

What is that?

Subprime loans are real estate loans to home buyers with low credit scores that were then bundled together to reduce the risk of default of any one borrower.

Hmmm, not sure I quite understand. What’s the potential fallout?

Hundreds of billions of dollars. Likely more.

Sounds big!

Yes, it’s very concerning.

Will this affect what I am doing?

Possibly.

Fear of Impending Doom

I went away from this deep in thought. If this fallout happened, what would happen if the economy crashed?

As I looked into this more, it looked like potential impending financial doom, the collapse of the banking system.

I started to tell my home builder to build faster so I could sell my current house at the top of the market before the financial crash occurred. They said I must be wrong because real estate was only growing and couldn’t suddenly crash like I was saying.

But my intuition said I was right.

Read the rest of my story at Ham.com along with my life lessons then and now (only a few minutes more but I hope will help you in your life)