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His Business Is on Top of New Top-Level Domains

By Adrienne Burke | Small Business

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Daniel Negari wasn’t even born yet when the first .com launched 30 years ago, but he’s the guy who gave birth to the first .xyz last year.

Negari is founder and CEO of XYZ. With nearly 1 million registrations and over 16 percent of the share of new generic top-level domains, the .xyz domain that his company operates is the most popular of the new breed of Internet addresses. XYZ also operates “.rent” and “.college” and recently announced a joint venture to bring the domains “.car,” “.cars,” and “.auto” to market later this year.

The Internet Corporation for Assigned Names and Numbers offers an animated video to help basic users grasp what the new web address suffixes are all about. But for an insider’s perspective on what one domain name registry calls “the not com revolution,” Yahoo Small Business Advisor spoke with Negari.

YSB: How did a 29-year-old come to be the operator of Internet domains?

Negari: I had the idea of owning my own top-level domain in 2006. In 2011, I started taking action to make it happen. When ICANN announced that the application window was open, I wrote a 300-page application. My company and another called Donuts applied for the “.college” domain. I outbid them for the rights in a private auction. I had an application for “.now,” but six organizations including Amazon applied for that, and Amazon won that auction. Google bought “.app” for $25 million in a public auction, and just went to private auction for “.map” and “.search.” For .xyz I paid a $185,000 application fee and recouped it one month after launching in June 2014.

YSB: How did you come up with the funding to cover the fee?

Negari: I had started a real estate company, an advertising agency, and a lead generation company. I have been a good boy putting money aside for when this opportunity would come. Applying for 3 domains cost $550,000. Because my business has been so successful, I’ve been able to reinvest the cash flow. I am not averse to risk. I’m an entrepreneur.

YSB: What is the purpose of a domain name that ends with .xyz?

Negari: .xyz could be used for any purpose for a global audience. People around the world know that the English alphabet ends in xyz, and it just makes sense to end a web address the same way. People in other countries might view .com as a country code for the United States, like .cn is for China or .uk is for UK-based web addresses. The domain .xyz has a global presence and makes sense for everybody in every language.

It’s also for the next-generation Internet users—we call them Gen XYZ. And we’re seeing interesting reasons for using .xyz. For instance, umake.xyz was started by former Autodesk employees who reimagined 3D design. They chose the .xyz address because x, y, and z are axis coordinates in 3D design.

YSB: Why register a business website with .xyz instead of .com?

Negari: People launching businesses online for the first time often start by looking for a .com address. But it’s really hard to get a real word in one now. Small business owners are concerned about whether their customers will be able to spell their web address correctly and type it into a browser, and the name is also important for search engine optimization.

In this new world where you have many options, it’s important to understand the advantages and disadvantages of going with a generic versus a specific domain name Web address that will serve your brand well and let people find you easily online. For example, a GoDaddy customer with the website groovywebdesign.com bought groovy.xyz. It’s shorter and more memorable and pretty groovy.

YSB: Aren’t they risking being confused with whoever is at groovy.com?

Negari: No. Groovy.com was registered in the early ‘90s and no one is using it. Whoever owns it probably wants a couple million dollars for that domain. The company that went through GoDaddy bought groovy.xyz for $10.

YSB: Isn’t it a matter of time before those poachers snatch up the .xyz’s too?

Negari: We’ve gone out of our way to not target online speculators who grab up tens of thousands of domain names. We’ve been focused on targeting small businesses to get them to get the names they can use for their business, so speculators have been left out of the .xyz zone.

YSB: Please explain: Your company operates .xyz, but a business that wants an .xyz address would buy their domain name from GoDaddy?

Negari: My company, XYZ, is a registry. We act as the phone book of the Internet for all .xyz domains. They’re reported to us and we propagate them into the DNS (domain name system) server. The company that owns .com does the same thing for .com. GoDaddy, Network Solutions, Register.com, Alibaba in China, and Onamae in Japan are all registrars—the retailers of domain names. You can’t buy a domain name directly from the registry; you have to go through an authorized retailer.

We charge the retailer a wholesale fee for a domain name and they can give it away for free or sell it for $10 a year or for $50 a year—it’s a function of the registrar’s business plan. Network Solutions gave away 375,000 .xyz domains to their best clients in a publicity campaign. Others are coupling the domain with value-added services like email products or web hosting.

YSB: How many people does it take to operate XYZ?

Negari: We have 37 employees in offices in Las Vegas and Santa Monica. Of those 37, almost half I have known my entire life. My Mom works with me, but I refer to her as Berta in the office. The founding team was five of my fraternity brothers from the University of Southern California. Six of them are here now. And other childhood friends and contacts are on staff. I’ve been blessed to have been able to attract such a talented team. Our business hums so well because of the hard work and dedication of the amazing team I have. XYZ was my idea, but without the efforts of people across the company we wouldn’t be where we are today, which is moving very positively in the right direction.

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