A Domain Name Association - part 6

I had an interesting question in one of the forums about the topic of a domain industry association. The question was, 'Why is Michael doing this?' This question really caused me to think why I was spending time thinking about a domain association and it justified an answer.

I looked at the two associations (thedna.org and ICA) and it was clear to me that they really didn't represent the interests of the typical domain owner in any way. For a start I have a real problem with any association where board seats can effectively be purchased. This is fine for companies where profit is the motive but in my opinion it is not OK for an association.

If an association is to truly represent members then EVERYONE needs to have an opportunity for a board seat....hence the concept of classes of members and an allocation of board seats per class that individuals could potentially win via an election in their class.

There also needed to be different fees per class (hence the financially modelling at the end of the presentation). The great majority of domain investors aren't able to afford $5K/year but many would put up their hand for $250/year.

Given the challenges I saw with the current associations I wanted to push the discussion forward in such a manner that it at least reached the two associations and a dialogue established at the domain investor level. So where am I at with my goals?

 

1. The ICA was represented by Andee Hill in the webinar (she is not a director of the ICA). The other directors of the ICA are trying to work out when they are able to jump on a call with me.....I think that many of them have been on vacation.
2. I have been contacted by the chairman of thedna.org and he is connecting me with the CEO. They are completely open to everything to embracing domain investors. This includes changing their constitution to ensure that domain investors have representation at the board level. It was actually a refreshing conversation with the chairman.

I find that the bigger challenge is to engage the domain investment community themselves. What has surprised me is the general apathy towards both associations and the discussion itself. There appears to be a disconnect in the VALUE provided by either association for domain investors. This could be a function of us tending to be "lone wolves" but I actually don't believe this is the cas e as domain communities do exist. Fundamentally I believe that both associations have failed to prove their value.....and more importantly for me.......I've failed in someway to proactively engage the community as well.

For example, out of the whole industry about 9 people said they would attend the webinar.....6 turned up. I've run webinars before on topics such as selling domains and had 18 people say they would turn up and 18 did. Just for the record I think that anything over about 15 people can become quite unwieldy. What's interesting is that over 500 people have read each of the articles in the series on "A domain association". This tells me that the topic is important to people but they aren't willing to engage as yet.

I would be interested to know if I am interpreting this correctly. I would also like any ideas on how we, as a community, can engage more effectively on the topic. Or, maybe we shouldn't and just let the chips fall where they fall . Should I run another webinar? Is the time wrong etc. Any feedback would be well received.....can't promise that I can do something but I would like to do my best and try.

I liked the picture of the key for this article as it has two sides to it. If only one side was present then the key wouldn't work. What we really need is for domain investors to speak to complete their side of the key and get their point of view across to the associations.......and myself for that matter. It's through an engaging dialogue that a better outcome for us all can be achieved.

I look forward to your feedback and comments.

1265 Hits

Domain Association - Part 5

The reason why most people do not join an association is that they don’t clearly perceive what the benefits are for them. We could leave it as, “I feel all good about myself being part of an association” but that doesn’t really cut it from a business perspective.

So why would anyone join a domain industry association?

  1. An association can fight the fights that you just can’t fight yourself.For example, let’s imagine that a domainer found that a registrar was jumping the gun and changing the nameservers on domains prior to them expiring.  The risk for the domainer is that could be “punished” by the registrar if they kick up a fuss…..while if the association had a code of conduct for registrar’s then this issue could be addressed.
  2. There are many fights that you just don’t know about.Whether it be price increases on domains, changes to the UDRP process or net neutrality and liability. There are many issues that actually impact the domain investment industry that as individual domain owners we have little to no say over while as an association we could have a voice.
  3. More confidence in dealing with people of at least some integrity.If there is a “seal” of approval that can be applied to businesses and individuals that agree to abide by a code of conduct then it would provide external buyers/sellers with more confidence that they are working with “good” businesses. Anyone that knowingly transgresses the code could be “punished” by have the right to use the “seal” taken away from them.

    I personally believe that the fastest way that we can all increase the value of our domain portfolios is to behave in a transparent and ethical manner. If an investment firm is wanting to invest $100m in the domain industry then they need to have confidence that they are dealing with people of good standing. Having a “seal” doesn’t solve the problem but it heads us all in the right direction.

There are many other reasons why joining a domain industry association would be beneficial to your businesses. I’m sure that as it expanded there could be deals cut with conferences, parking companies and registrars for association members that would largely offset the cost of any fees…..but that is a little ways down the track.

I’ve had a number of people say that if a person they didn’t like was in the association then they wouldn’t have anything to do with it. Just consider where this line of thinking leads. If everyone thought this way then no one would be in the association because there is ALWAYS someone that has offended you in the past.

On the other hand, if a person is in the association and they agree to abide by a code then their behaviour will need to change or they are evicted. One is backward looking (I was hurt in the past by them) and the other is forward looking (give them a second chance but they must change).

Other people have suggested to me that there are too many different and conflicting issues for a single association to handle. I actually disagree with this. The reason being is that the structure I proposed in an earlier article suggests the application of taskforces that are formed and disbanded as issues arise and are dealt with. There can be as many taskforces that are necessary to deal with the multitude of issues…..all it proves is that an association is really necessary to deal with them all.

Conflicting issues are ultimately addressed by the board and each constituency has an equal say at that level of the association. Remember that the board is charged with the task of expanding the domain industry.
In my time as vice-chairman of the Australian Internet Industry Association there were many times that individual directors were in commercial conflict with one another. The challenge for the board was to always focus on what is best for the industry and not just a particular member.

I hope that you have found the series on a “Domain Industry Association” interesting and thought provoking. I’ve had a LOT of feedback via email…..feel free to leave your own public comments as well.

--------------------------------------------------------------

Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He is the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael

1244 Hits

A Domain Name Association - part 4

Funding the Association

To be effective the association must have both a representative membership base and also the funds to fulfil the vision and direction provided by the board. There is little point in running an association that either prices itself out of its market or does not have the buy-in of the wider industry at large.

The proposed fee structure is to be based upon the Class and category of membership. Annual membership fees range from as low as $250 for a small individual domain owner doing less than $10K in sales per year up to $25K for a large company doing in excess of $5m in revenue.

By having the annual fees linked to a Class and category (eg. A, B or C) of membership means that the association is affordable to the broad spectrum of the industry. From the previous article I indicated that the members within each of the categories can also nominate for board election to represent their constituency.

There are four major areas of the cashflow.
1.    Drivers – new members and total number of members.
2.    Income from membership fees – other potential incomes have been ignored.
3.    Expenses -  what it will cost to run a lean business with a reasonable CEO package.
4.    Profit and cashflow – results if the targets specified from the above are met.

The drivers outline the targets that the new CEO and board for that matter need to reach in terms of new members by category. After the initial push of gaining 41 members a typical month will mean 10 new members each month for the following 12 months. This will provide near enough to 150 members in the association by the end of 12 months. This does not count the “free” members from the “general user” category that would essentially sign-up for a newsletter.

The above drivers and fees then translate through to the income line of the association.


Finally, the expense are calculated and a monthly profit and cashflow is derived.



As can be seen from the cashflow the lowest point is around $90K positive and by the end of the 12 months there should be near enough to $120K in the bank. The total revenue for the association is $406K with $287K in expenses. This will fund a CEO and membership assistant plus allow ample funds for marketing and traveling to the various conferences around the world. It also allows a not insignificant amount of money for consultants (eg. legal advice, lobbying etc.).

The association will not have an office....I really don't think that it needs one. This avoids a lot of fixed costs and overheads.

So is it financially feasible to build an association based upon these numbers? Although more work may need to be done on the financial model I believe that it does indicate that our industry can support a thriving association. It really comes back to whether the wider community buys into the vision and principles outlined in the initial articles in this series.

There are two keys to building a successful domain name association:
1.    Having a working board – there is absolutely no point in having directors that turn up and haven’t given any thought to the association since the last board meeting. Board members need to be harnessed and put to work for the people that voted them into that position.

2.    Sourcing the right CEO – There are a lot of skills that this person will need to have. Corporate governance, team building, political savvy, respect of the industry and of course an ability to inspire others to join the association. If the wrong CEO is selected then I think that trying to meet the targets will fall largely on the directors…..this may be quite hard.

I know that this article has skirted a number of issues but I believe that it provides the bones from which a good discussion can be had to add the flesh. So please don’t be shy! I’d love any suggestions that you may have and how the association can be given new life and vitality.

--------------------------------------------------------------

Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He is the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael

1259 Hits

Domain Association - Part 3

The Chairmen, Treasurer, CEO and Taskforces
Over the years I’ve seen many organisations get confused over the rolls of the CEO, treasurer and chairman. Chairmen often try and be the CEO and treasurers try and control the association via the budget.

The facts are that each of the rolls are critical to the success of the association as long as those people in the positions clearly understands their tasks.

The Chairman
As well as representing the association to other organisations the chairmen:
1. Has a casting vote in the board meeting in the event of a tied vote.
2. Represents the association at events where the membership is present (eg. AGM).
3. The most critical role is often to provide support for the CEO and help navigate any internal or external political issues so that the job of the association can get done.

In my time as the vice-chairmen of the Australian Internet Industry Association I often found myself talking to the CEO and providing another perspective in deliberations. This then sometimes came to offering personal support as the role of the CEO can be personally taxing. To this day I have a great friendship with the former CEO and a huge amount of respect for what he helped accomplish during his tenure.

The Treasurer
This is often a thankless task but one that is vital to get in the hands of a competent person. People often think that the treasurer’s job is to “do the financial books”. In some cases this may be true but it’s often better that a book-keeper actually prepares the finances and reports back to the treasurer. The treasurer can then report on the financial position of the association to the board and to the members at the AGM.

In my experience as a treasurer I found it useful to establish a finance committee where the CEO, two other board members and I were in attendance. We met on a phone call once per month to review the figures and to ensure that they were within expectations.

I would work with the CEO to establish annual budgets to meet the association’s requirements and the goals of the board. This budget would be submitted to a finance committee meeting and then to the following board meeting for approval. Everything was then measured against the budget.

I should mention that when I first stepped into the treasurer’s role I had inherited a bit of a disaster and some tough calls had to be made (eg. Cutting the salary of the CEO). When I handed the position onto my successor I was quite proud that the CEO had been reimbursed his reduced salary and there was over $250K in the bank. It really wasn’t rocket science….just prudent financial management.

The CEO
Sadly, I’ve often found that chief executives make reference to their board in a less than friendly manner. This is a shame as a strong association is often the result of a strong board that has a productive relationship with the CEO.

Generally speaking the CEO of the association should be fulfilling the policies of the board.

That being said, from a practical point of view the CEO provides the following:
1. A bridge between the membership and the board.
2. Represents the association to other organisations.
3. Ensures that board policies are acted upon in a practical manner.
4. Coordinates legal responsibilities (eg. AGM, finances etc.)
5. Provides feedback to the board on the success/failure of policy initiatives

In my opinion the CEO should always be on the board to help avoid any miscommunications.

Taskforces
What I found worked really well was the establishment of taskforces that were centred on particular issues. A director or member would chair the task force and interested members could then join in to add their own contribution. Task forces would only be formed while the issue they were addressing was pertinent.

For example, I chaired the online advertising standards task force. At the time, there weren’t any standards and advertisers had no idea what a view, click or a CPM really was. This reduced the amount of money that they were prepared to spend in online advertising.

I’ll never forget trying to “herd the cats” of advertising agencies that were building various technologies to generate metrics for their clients. Each of them thought that their own methods were the best. In the end they saw the sense in a universal standard. The result was the online advertising industry grew by an order of magnitude.

Another taskforce had to do with cyber-crime. The CEO of one of the major ISPs chaired the taskforce and worked with government, authorities and other competitors to work at reducing online criminal activities.

Taskforces are a way for the membership to get involved in their association that is WAY beyond just paying the membership fees. Since there is feedback up and back from the board then a taskforce could be formed or even be disbanded very quickly. It also meant that the CEO became more of a coordinator rather than a doer that is being run ragged.

When I reflect on the domain industry there are a number of taskforces that really need to be established.

Here's a few taskforces off the top of my head:
1. Net neutrality and the impact upon domains.
2. UDRP and legal frameworks for dispute resolution
3. Transparency of statistics for monetisation
4. Establishment of a domain investor code of conduct
5. Elimination of fraud from the traffic industry

I’m sure that any of you reading this could add a few more to the list. What’s important is that they are issues that you are passionate about that need buy-in from some members to be a part of the taskforce and approval by the board. You can’t have people wanting to create completely random taskforces!

As per usual, I look forward to your feedback and constructive comments.
--------------------------------------------------------------
Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He is the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael View pos

1133 Hits

A Domain Name Association - part 2

This is the second in a multi-part series on how I would approach the establishment of a Domain Name Association. I must say that the feedback has been fantastic to date and that the discussion has been really valuable. I would encourage everyone to take part in the discussion.

The role of the board is to monitor the progress of the association so that it is in line with the guiding principles and vision. The following diagram illustrates the position of the board with respect to the principles and membership.

The board has 3 primary responsibilities:
1. Financial prudence and good governance to ensure that the organisation is solvent.
2. Fulfilling the vision via policies that benefit the different membership classes (more on this later).
3. Empower the executive with the necessary resources to meet the policy objectives

Members of the board may be part of a subcommittee that is involved in management tasks but when they report back to the board they need to act as directors.

 

In board meetings all directors of the association have a fiduciary responsibility to leave their external objectives (ie. personal and possible employer) and to work for the betterment of the association. This means that at times individuals may find themselves in a conflict of objectives. If this is the case the director will need to notify the board of a possible conflict and have it minuted that they have excused themselves from future deliberations on that particular issue. Typically, this will also involve the individual leaving the board meeting physical for a short time.

Issues such as the one above will need to be addressed as a part of the code of conduct that each and every director would need to sign prior to becoming a director.

Board Structure

Other than the CEO all board positions are for a maximum term of 2 years. Any director can serve for a maximum of 3 consecutive terms (ie. a total of 6 years) prior to having to rotate off the board. After being off the board for a term they may then offer their candidacy for election. This will then force a rotation in the board and ensure that fresh ideas are constantly being brought forward by new directors.

The board may initially be formed with a cascading terms (ie. some positions deemed as being already served for 1,2 or 3 terms) so that all elections for all board positions do not fall at the same time.

All board positions are only accessible either via:
1. Election in a particular category class.
2. Appointment by the board to assist in its proper functioning.
3. Chief Executive Officer

Under the guidance of the three overarching principles of inclusive, representative and transparent I would suggest the following structure for a fully functioning board. The category and classes of available board seats are derived from the various “freedoms” that are core to the vision outlined in part 1 of the series.

Category

No. Seats

Class

General User
Regular domain owner

1

A

 

 

Domain Investor
Invest in domains as a business model

3

A

B

C

Domain Supply
registries, registrars

2

A

B

 

Monetisation
parking, zero click, affiliate

2

A

B

 

Domain Sales
brokers, marketplaces

2

A

B

 

Development
Designers, business developers

2

A

B

 

Board reserved

2

N/A

N/A

 


Members that can possibly be in multiple classes must choose which class they represent at the time of becoming a member. This means that members can ONLY represent a single class. Members with multiple associated organisations may only represent one class. For example, if a member is a part of a group of companies that has both a parking company and a registrar then they must choose which class that they represent. This is to avoid any individual company potentially seizing multiple board seats with different affiliated companies.

To be geographically inclusive there needs to be at least three continents represented on the board. If there isn’t then the board can use one of its two reserved seats and appoint a director from a region to fulfill this objective.

The classes of A, B and C represents bands of size (by revenue). For example, there may be 5 domain investor members that qualify for the class A director seat. Any of these member may offer themselves up for their class’s board seat. If there is more than one member offering their services to the association for a single position then the other members in that class may vote whom they would like to represent their class on the board. In the event that there is a tie the current board chairmen has a casting vote to break the deadlock.

No board seat is automatically awarded to any member that “pays” for the position. All members are treated equally in their class and all directors have equal voting rights within the board itself.

This structure for the board will mean that it is inclusive, representative and transparent. All members will have an opportunity to become a director, represent their membership class and elections will be transparent and open. This would then satisfy the guiding principles of the association.

I would like to make it clear that these are my thoughts on how I believe that a domain association could be established. This is not meant to be disparaging against any existing associations in anyway whatsoever (eg. ICA, thedna.org etc.). I’m sure that this article will provoke a great deal of thought and hopefully comment. It is my belief that it’s through open discussion that a better outcome can be achieved.

1058 Hits