from Hacker News

The .Org Fire Sale: How it sold for less than half its valuation

by metasj on 12/3/19, 1:37 AM with 176 comments

• by lancewiggs on 12/3/19, 2:18 AM

  I wrote about this too - linked in the article. https://lancewiggs.com/2019/12/01/did-isoc-leave-1-billion-o...

  The travesty is that ISOC has given up a sure-fire stream of $55+ million/year in tax-free income, along with the ability to easily grow that to over $100m/year with price increases - all for just over $1.1 billion.

  As any r/personalfinance reader can tell you a rule of thumb for endowments is to spend a maximum of 4% of your assets each year. This means $44m from the $1.1bn, which means ISOC is immediately worse off than they were forecasting for this year (~$55m). Alternatively use the Yale method, which in today's low-return market will yield similar or worse results.

  Moreover it's clear that ISOC are not behaving as the sharpest of investors, so we can imagine that the endowment might be be poorly managed or over-spent.

• by metasj on 12/3/19, 1:57 AM

  Related past threads:

  "Save .org": https://news.ycombinator.com/item?id=21611677

  "Take action to save .org": https://news.ycombinator.com/item?id=21664582

  "Why I Voted to Sell .org": https://news.ycombinator.com/item?id=21656960

  "ISOC sold the .org registry to Ethos Capital for $1.1B" https://news.ycombinator.com/item?id=21667355

• by shkkmo on 12/3/19, 4:23 AM

  Wow, the level of corruption and self dealing here is remarkable. Chehadé was the CEO of ICANN until a couple of years ago.

  > On May 7th, Chehadé registered the domain for EthosCapital.com.

  > On May 13th, ICANN decided to lift the price caps anyway. The decision was made by ICANN staff, not its board, evading the obligation to publicly carry out due diligence and explain board decisions.

  > On May 14th, Ethos Capital was incorporated as a new Boston-based “investment firm”, founded by Brooks — who stepped down from running the 60-person team at Abry to do so. Ethos Capital has two staff: Brooks and Nora Abusitta-Ouri, a former ICANN SVP who later worked for Chehadé. [0]

  Then a couple of months later, surprise, .org gets sold to Ethos Capital... Almost as if this was the plan the whole time...

  Here's hoping that somehow these crooks actually end up in jail...

  [0] http://blogs.harvard.edu/sj/2019/11/23/a-tale-of-icann-and-r...

• by mortenjorck on 12/3/19, 2:44 AM

  I wonder what the level of awareness of this is in the nonprofit community itself. Something like the National Council of Nonprofits would seem to be in a good position to file a suit or at least raise awareness among its members who might be interested in forming a class.

  While a major charity like the Salvation Army certainly doesn’t care if a single, sub-$100 annual expense doubles or even goes up by a factor of ten, thousands of small organizations across the country might care enough to band together and take action.

• by agwa on 12/3/19, 2:28 AM

  > Take a page from the Donuts book: create multiple price tiers for popular domains, up to 100x the base rate.

  > Raise rates for long-time owners of common words. They weren’t using that premium space anyway.

  This is forbidden by the .org registry agreement, 2.10(c): https://www.icann.org/sites/default/files/tlds/org/org-agmt-...

• by slantedview on 12/3/19, 3:19 AM

  "Sullivan suggested that their goal is to return roughly the same annual revenue as they have been getting from PIR — around $50M. Of course this time it would come without the possibility of expanding the underlying business year by year."

  This hurts my head. Needless to say, the returns on this fund will be _far_ less assured than the returns on simply maintaining the .org business as it was (especially with Goldman managing the fund).

  Impressively, even ISOC comes out a loser from this deal. Only Ethos wins, but then, that was surely the point.

• by romaaeterna on 12/3/19, 2:40 AM

  If this is really the case, someone(s) very possibly took and gave bribes, and we're going to see Federal scrutiny all over this.

• by leibnitz27 on 12/3/19, 1:58 PM

  I bought an org domain back in the 90s, and have been using it as my personal domain (i.e. also primary email address) ever since.

  While, granted, I was perhaps a little silly to go org (it seemed like a good idea back then!), it's mildly terrifying that my personal footprint on the web of 20+ years can now be held to ransom by a random VC firm, and to keep my own email address I might have to pay an additional $$$ annually.

  Sigh.

• by enjoyyourlife on 12/3/19, 3:10 AM

  The reason for this is because former Ethos members are involved with ICANN and are probably making money because of the sale

• by tinus_hn on 12/3/19, 8:35 AM

  I don’t know if it is allowed but it sure would be amusing if ICANN decided to grant .org to someone else now, leaving Ethos with a worthless carcass.

• by TomMckenny on 12/3/19, 3:20 AM

  Honest question: since .org is relied on world wide, why are just two US state courts the only ones with the legal power to review the sale?

• by scarejunba on 12/3/19, 9:31 AM

  My favourite part is that they didn't own it really. We told them to run it for us. It's like if my property management guy sold my house and took the money.

• by LegitGandalf on 12/3/19, 3:54 AM

  It's almost like someone figured out how to cash out. Just about any percentage kickback on a billion discount is life changing money.

• by philipn on 12/3/19, 2:40 AM

  Are registries allowed to charge different prices for different domain names?

  E.g. can they ask google.com for $1B to renew and mygrandmascookiecompany.com for $20 to renew?

• by jijji on 12/3/19, 4:42 AM

  it looks like an inside job when the CEO of ICANN sells the .Org TLD to himself...

• by glitcher on 12/3/19, 3:09 PM

  I find it very curious that NPR has not covered this story, _and_ that they are notably missing from the list of organizations that signed at savedotorg.org. Especially because they are a .org!

  I mean, I'm not trying to imply it should be attributed to malice, but are they asleep at the wheel or what?

• by syshum on 12/3/19, 12:32 PM

  This is one of the most blanetly and openly corrupt transactions in modern history. It saddens me that it looks like they are going to get away with it as well..

• by dependenttypes on 12/3/19, 11:02 AM

  This is a good chance to stop our dependence on DNS and move to things such as .onion domains instead (which by the way help avoid the whole certificate CA mess).

• by jacquesm on 12/3/19, 6:00 PM

  Isn't there a technical resolution possible here where outsiders set up a new root for .org and people can change their allegiance and leave them to rot? That way Ethos capital (what a disingenuous name) paid $1B for nothing at all.

• by zapita on 12/3/19, 2:18 AM

  The article says that a national bond fund may have fronted the endowment without turning .org into a for-profit. What does this mean?

• by Darvon on 12/3/19, 2:11 PM

  It's so hard to stay angry and not just default to sad.

• by xivzgrev on 12/3/19, 3:50 PM

  Ok honest question fellow comment reader - what are you going to do about it? This is the 5th or 6th article I’ve seen on this transaction, with hundreds of comments each.

  Ethos Capital does not give 2 shits about your comments here.

  Are you writing to the DA like this article suggested? What else can you do?

  Myself, I don’t personally care that much. But I see a lot of people here obviously do, and I don’t really see that energy translating into action. I would like to see it move forward in a positive direction, so I’m asking the question of you - you don’t like it, what are you going to do about it besides complain here?

• by WalterSobchak on 12/3/19, 4:01 PM

  Can the URL be updated to use HTTPS, which is fully supported on blogs.harvward.edu?

  https://blogs.harvard.edu/sj/2019/12/02/the-dot-org-fire-sal...

• by timwaagh on 12/3/19, 11:21 AM

  Maybe they can use the money to buy some shares in Ethos. They seem to be going places.

• by kerkeslager on 12/3/19, 10:17 PM

  For all the people who keep saying there's no application for blockchain: here's one. Namecoin was a bad implementation, but the concept is sound.

  Letting companies control domain names serves no purpose. They don't prevent domain squatters, they've censored on behalf of governments in the past, and now they're allowed to gouge nonprofits on .org domains.

  A decentralized domain name system wouldn't solve all these problems, but at least we wouldn't be paying rent-seeking middle-men to provide terrible service.

• by apexalpha on 12/3/19, 12:58 PM

  I still can't really believe someone can sell a building block of the world wide web like .org tld. Who runs .net? .com? .edu? .info? Can they be sold, too?

• by edgefield0 on 12/3/19, 3:19 AM

  Is there a benefit to locking in pricing today for say 10 years? I assume the major registries, such as namecheap and godaddy, will allow a longer term buy in?

• by markman on 12/3/19, 11:39 PM

  I'm probably going to regret asking this and I apologize for my ignorance but I thought .org's were all government and nonprofit. I didn't think anybody owned it nor that the entire domain could be sold?!

• by dropmann on 12/3/19, 5:10 PM

  Wait, if you can no longer trust ICANN, does not that mean you cannot trust the whole internet (domain name system) anymore?

• by kome on 12/3/19, 8:43 AM

  I love the smell of some rent extracting capitalism in the morning...

• by lazyguy2 on 12/3/19, 3:45 AM

  The reason it sold at half it's valuation is because the valuation was bullshit.

  It's like some guy claiming his classic car is worth 25,000 dollars. If nobody is offering 25k for it then it's not worth 25k. Period, end of story.