Sunday, October 28, 2007

Domain Investing?? Check Out This Story

Last month,Chris Chena personally dominated our Big Board as the buyer of 8 of the 10 most valuable domains listed. No one individual had ever done that before (and we’ll be surprised if anyone ever does it again). The South American domain investor/developer spent over half a million dollars that week. Very few 27-year-olds have access to that kind of money and until recently, neither did Chena.

Chris was born in Asunción, the capital of Paraguay in late 1977. Chena told us “I grew up in the heart of South America in a country were summer lasts all year long and it is a place I really enjoy. The image the rest of the world has of my country is one of poverty and insecurity, but it is a nation of very hard-working and friendly people - in fact I think that the friendliness and warmth of the Paraguayan people has no match.”


At home in Asunción, Paraguay
“I come from a very humble family, though we never lacked anything,” Chena said. “Thanks to the constant work of my father Alfredo Chena and the care of my mother Nérida Núñez, we progressed towards a middle-class lifestyle and we all strived to further our education. Even now, my father is a dedicated student. He started working as a banker when he was very young and is now also a business manager, accountant and lawyer who is very respected among his peers. My mother represents the dedicated and hard-working Paraguayan woman and from her I inherited an untiring devotion to my work as well as my stubbornness! I will repeat something over and over until it works out, never turning back. It’s my family’s legacy.”

When Chena was three years old his family moved to a small neighborhood in the outskirts of the capital. He recalls a very happy childhood even though he didn’t quite fit in with the other kids. “I was more interested in mental activities than physical,” Chena said. “Everyone else loved football (soccer to Americans), fights and physical games. I was the introverted kid - shy, curious and with an inclination towards science and literature. Initially that was a problem for me in relating to other kids my age. They considered me a “fool” for not being part of the group and a fan of the things they followed. The only times I really felt like socializing with the group was when they showed off their computers or their latest videogame consoles - something I couldn’t afford at the time. In Paraguay, especially back then, it was a luxury to have those kinds of things and I loved playing with them when they would let me!

In many parts of the world, the most memorable day many kids have is when they get their first bike. For Chena, the special day was when he got his first computer! “My best moment came when my father, after saving a lot of money from a long assignment in Uruguay, bought me my first PC, which ran on an Intel 286. I was 13 and it was my dream come true. I was fascinated with what a great tool the computer was and I immediately began researching everything related to computers; design, animation, programming and of course I filled my computer with games and viruses in record time - I dare anyone to beat me at it!” Chena smiled.

Of course, computers really come to life when they are connected to the Internet. Chena said “Paraguay was one of the last countries in South America to have access to the Internet, so at first I had to quench my thirst for “sharing information” by using local networks - bulletin board systems, local chat rooms and things like that. Finally in 1998 I got Internet access and it almost broke my family’s budget because I spent so many hours doing online research with a dial-up connection!”

A year after getting on the web, Chena decided he wanted to study something he found especially fascinating – 3D animation. In 1999, he started taking classes on the subject at a local technical school. Chena recalled, “after I finished the course I presented an amateurish little short film that ran 3-4 minutes. My teacher really liked it and pushed me to enter it in a national video competition. I was skeptical but I did it and was surprised to be invited to an awards ceremony in a luxurious hotel where the various films were presented. The event was broadcast on a national TV network and to my surprise, I won first place in my category!

All of the sudden, various companies, advertising agencies and media networks started calling on Chena to do special projects for them. At age 21 he founded his first company and ran it from a small room in the back of his house. “I specialized in creating animation and multimedia products,” Chena said. We did several jobs including presentations and interactive CDs for many important companies in Paraguay and even for the government.” Chena’s company was a true one-stop shop, providing programming, design, animation and music scoring, merging everything seamlessly together in the final product.

In 2000 the company launched what became the first multimedia magazine in Paraguay. “With that bi-monthly publication we reached all of the computer users in the country and drew the attention of major companies that didn’t know this kind of material could be produced inside our national territory,” Chena said. His client base exploded, prompting him to move briefly into professional office space. However he soon moved the office back home because after months of working practically around the clock he decided he had to have his bed nearby.

To avoid burnout, Chena realized he would have to rework his business model and find a way to serve large markets with less effort. Welcome to the domain world! During his late night research on new areas of e-business, he read about some high ticket domain sales and why domains were valuable electronic assets. At first he was skeptical, thinking it was just another get rich quick scheme. Still he was intrigued, so he decided he would stick a toe in the water. In case the sales reports were smoke and mirrors (which some from those days did in fact turn out to be) he decided he would instead build real businesses on a domain or two and sell intangible goods that wouldn’t require maintaining an inventory, shipping and a large staff.

Chena told us, “my first commercial site was ProDominios.com, a domain reseller site for eNom which I used to fill an empty market space in my country – a place to register .com domains at a low price. In Paraguay, any domain registration or hosting company would charge you up to $50 for a .com. You can imagine how mad they were when ProDominios appeared offering Paraguay a chance to register their domains for less than $8! When I first opened some ISPs even blocked my page, but after talking with them I got them to stop doing that!”

“The business was a complete success. Within a couple of months it was taking over the market and I decided to add a hosting service at a very low price too,” Chena said. As he became more comfortable with Internet business he finally started dabbling in buying and selling domains. “I listed some on Afternic and Sedo and began exchanging information with other users on the domain forums. I lost a lot of money at first, but before long I was selling many domains at a pretty good price for an amateur!” Still Chena felt domains could be even more productive if he stopped selling them and concentrated on buying and developing them.
“Thank God I was able to connect with the right people and for some reason they were patient and kind when I contacted them for help or information - people like Rob Takovich, Thunayan K. AL-Ghanim (Elequa), Igal Lichtman and Cameron Johnson.
I have sacrificed the free hours of my youth for this business I love and I don’t have much of a social life, but on the other hand I know and get to work with wonderful people and learn from them, as they learn from me. It’s a never-ending cycle and I do not see it as a job,” Chena said.
Chena’s development projects, many of them based on blue chip Spanish keywords, have flourished. “From the day I decided to start acquiring domain names my goal has been to acquire only those names that represent an entire category that is popular on the Internet or at least a broad part of its spectrum. That is why I bought Juegos.com (games in Spanish) and not Ajedrez.com (chess) for example. The same goes for other acquisitions like Viajes.com (travel) and Computadoras.com (computers). The plan is to create an entertainment and information network with useful services for Spanish-speaking users and it echoes back to most things I do: filling up empty spaces to improve those that haven’t been properly attended to.”

Chena already has the makings of an empire in place. “We’re entertaining over 7 million visitors each month, and having tens of millions of ads shown each month. The traffic is growing and we intend to double it in one year,” he said. “It is the results from these online businesses that provide the money for my company’s big domain acquisitions. Though I have to admit, not all that I earn on my businesses is re-invested on the Internet. I also use many of my “e-earnings” in other offline conventional businesses, as well as personal projects for education and more philanthropic deeds. But without doubt, the main source of my income is (and will probably always be) the Internet.”

There is no reason to doubt that, especially with the astronomical growth in Hispanic use of the Internet. “It is stunning,” Chena said. “According to an AOL study, Hispanic people spend 43% more time online when at work and 13% more time online when at home than the rest of the online population. Comscore Networks, a firm that measures Internet traffic, indicated that you can add a minimum of 20% growth every year to the over 15 million Spanish-speaking users online. This number seems a little too low for me, since many friends in Mexico and countries around Paraguay keep telling me about how fast Internet connections in their countries are growing. 37% of the Hispanic users in that study indicated that they would increase their ecommerce activities. I’ve seen it myself, as my number of transactions from Spanish-speaking users has doubled on several of the sites that draw ecommerce related traffic.”

Though Chena originally gravitated toward domains with the idea of lightening his workload, he is still at it 7 days a week. “Many colleagues ask me why I don’t just park the Spanish domains and earn PPC (pay per click) income, or take one of the large offers I have received from major companies and advertising networks (I’ve declined offers for millions of Euros on sites like Juegos.com and Viajes.com). I believe that when you have high traffic related to a Spanish language market with relatively limited online options, the ideal thing is to develop those niches and centralize them in a portal that represents what users look for in each generic domain name. Then you enrich the site with additional services that improve their online experience. To show you what happens when you do this, Juegos.com got about 15,000 unique visitors a day when I acquired it, now with the site fully developed it welcomes 65,000-100,000 unique visitors a day, also feeding a database of double opt-in subscribers for our email marketing service; loyal subscribers who respond to the offers and services that we present to the Spanish market,” Chena said.

Obviously, in the long standing debate over whether it makes more sense to monetize your domains through a PPC parking program or development, Chena has chosen development. But he agrees that one size does not fit all. “I believe that it is impossible to tell which one will work better for all cases. It depends on many factors, especially the resources each domainer has to work with. In my case, based on my experience, developing is the best option, and that’s what I am dedicated to doing with my team at Chena Ventures,” Chena said.




“PPC is always the easy way in, there’s no doubt about it - costs are reduced, support is reduced, income is “stable” month to month. But then again the best way to improve those profits is by developing," Chena said. “Lets assume that I decided to only make money through PPC. I wouldn’t be happy with just parking the names. I would at least develop some minimum content on the sites. This will help segment the information depending on the ads that pay more per click and will also increase the traffic. Based on sales, subscriptions, or earnings per click, I think a little developing almost always helps maximize monetization,” Chena said.

“Maybe this question can be answered with another example from my personal experience. Two years ago I bought a “typo” that had 450 visitors a day. I had no idea of what to do with the traffic so I parked the domain, first with a PPC company then on a site with a little content and Google Adsense. I was making $90 a day on the best of days, not bad for a typo that only cost me $650 to buy. Two months later I decided to try something new and integrated an ebook that was related to what most users where looking for on the site and I charged a small fee to access the content. Suddenly my earnings jumped to $400 a day. If I had left the domain parked in this case I would’ve had a good profit since I only paid $650 for the domain, but if I hadn’t dug deeper and invested in development, I would’ve never seen the $12,000 per month that the domain eventually reached.”

Chena added “I’m not saying this will work in every case. You always have to study your visitors and what they look for, and there is obviously some work and money to invest into developing each domain. In any case, even if development does not produce a major increase in revenue immediately, it at least ensures that traffic will grow with time much more than if you had left the domain undeveloped.”

One domain Chena can’t wait to fully develop is Paraguay.com which he acquired for $150,000 during that buying spree last month. “Paraguay.com will be focused on bringing investments to our country and for certain types of selective tourism. Every day I receive messages at Paraguay.com from people that want to buy properties in the green and exotic areas of our country, as well as travelers asking for the best hotels, popular places to visit, etc. Even though I paid a lot for the domain, that is much less important that the responsibility I now have to handle the image of my own country on the Internet. Just a few days after acquiring the domain, I received a call from a government agency wanting to invest in the project. It filled me with pride, and obviously showed us that the right decision was made,” Chena said.

One of the most interesting things we can tell you about Chena is that he currently owns very few domains. He has been such an active buyer that many people assume he holds a huge portfolio but that is not the case. “I’ve sold most of them, and literally got rid of all the typos and alternative extensions at prices that are now considered very low," Chena said. "I now stress quality over quantity and have just over 70 domains, compared to the 400 that I used to have.”

Of course the 70+ domains he holds are nearly all crown jewels. His personal favorites are the newly acquired Paraguay.com and Juegos.com which are both under development. Chena added, “close behind are Viajes.com, the leader in the market for Hispanic travel (which will be officially launched next month) and Animation.com, which represents my affinity for animated digital art. I also have the Spanish version of the latter, Animacion.com, which is developed and is a place filled with animations from Spanish-speaking authors.”

Chena’s name has become synonymous with the Spanish market – but he is not the only one mining that lucrative space. “There is competition in this business as in any other, but luckily for me, the main Spanish domain investor/developers are friends of mine. Hopefully they’ll end up selling me their domains!,” Chena laughed.

“Seriously though, I’ve noticed that there is more competition and the prices are going up on the Hispanic domain market. My friends at Sedo say, “Chena, it’s your fault!” However, many are new players that want to gather domains in the “virgin” Hispanic market and benefit from its constant growth. But what happens is that, being new at this, they will probably not pay the prices I or other active domainers in the market will pay, since we know the business and know where to press the right buttons to develop and monetize Hispanic traffic to the highest degree possible.”

“I’m not about to obtain all of the Spanish domains, I’m only interested in those that match what I mentioned earlier. It would hurt to see the rest of the Spanish domains just parked on English PPC pages, or even worse, giving an error page, so I am happy when the Hispanic domain market moves and gets new .com sales, especially if the buyers are Hispanic developers,” Chena said.

In many countries, the local ccTLD extension is very popular, even rivaling .com in places like Germany (.de) and the UK (.co.uk). We wondered what Chena thought of the prospects for his country’s extension - .py. “To tell you the truth I only have the .com.py extensions for my own businesses," Chena said. The main reason is that Paraguayan traffic operates in a strange way, and they are more used to typing the .com than the ccTLD, probably more than most other countries. Even Paraguayan companies register more .coms nowadays, and that’s one of the reasons why my domain registration service, ProDominios.com, has become so popular. The other is that the number of Paraguayan users is still very scarce, something I intend to change with time, investing in new services and promoting the use of the Internet in my country."

Though his web enterprises keep Chena occupied almost every waking hour, he does have one weakness that occasionally pulls him away from the computer. “Yes, I love movies!,” Chena declared. “I have a big room with a home theater and a collection of thousands of original DVDs, from movies to my favorite TV series (The Sopranos, CSI, etc.), I’m always hunting for something new at Amazon. Every time I get the chance I invite friends to my place and we have a good session of movies and pizza.”

“Though I try to watch at least one movie a day, sometimes I just can’t detach myself from the PC. In fact, I work 7 days a week and barely sleep. Most of the time, my best ideas come when I’m about to fall asleep and I interrupt my sleeping to follow up on them! My schedule is highly unstable. I believe this is the case for some other people in this business too."

Still, Chena wouldn’t want anyone to feel sorry about his workaholic ways. “Work” is just an expression,” he said. “To me this is a pleasure, almost fun! Thank God it is something I love that (without having it as an objective) gives great results money-wise and allows me to forget about that factor, so I can dedicate myself to providing my users with what they are searching for, having fun on the way and learning every day.”

While Chena’s big buys often put his name in the spotlight, he is not used to being the center of attention. “I am a very shy person and very dedicated to my work so I don’t have a very active social life. The best way for me to reach people is through my work and many of the people I admire the most are people I haven’t personally met, but they have my respect whether it be for what they are bringing to our community of domainers or for the kind attention they have given me; Ari Goldberger, Ron Jackson, Adam Dicker (DNForum), Matty Purtell (DomainState), Mike Davidson (seed investor of Paypal), Matías de Tezanos, Alberto Dominguez and Greg Manriquez, just to name a few,” Chena said.

Though his career is just beginning, Chena has crammed a lifetime of learning into the past few years. Based on his experience, he has some advice for those who might want to follow in his path. “To all domainers that are starting, I want to say that it might be hard at the beginning, but the best shortcut is to learn more and participate on the forums. Almost all domainers have a great characteristic, they help each other and they have no problem in giving advice to improve your business and to make your first step the right one!” Being a person that others now look to for advice seems strange to Chena. “Something that keeps amazing me is that many consider me a “big player”. I feel like I am just starting and that there is much to learn and definitively much more still to do. The real big players for me are the ones I mentioned in this interview

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