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 The man who owns the Internet

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PostSubject: The man who owns the Internet   The man who owns the Internet Icon_minitimeMon Jul 30, 2007 11:47 pm

Kevin Ham is the most powerful dotcom mogul you've never heard of,
reports Business 2.0 Magazine. Here's how the master of Web domains
built a $300 million empire.

(Business 2.0 Magazine) --
Kevin Ham leans forward, sits up tall, closes his eyes, and begins to
type -- into the air. He's seated along the rear wall of a packed
ballroom in Las Vegas's Venetian Hotel. Up front, an auctioneer is
running through a list of Internet domain names, building excitement
the same way he might if vintage cars were on the block.

names come up that interest Ham, he occasionally air-types. It's the
ultimate gut check. Is the name one that people might enter directly
into their Web browser, bypassing the search engine box entirely, as
Ham wants? Is it better in plural or singular form? If it's a typo, is
it a mistake a lot of people would make? Or does the name, like a
stunning beachfront property, just feel like a winner?

When Ham
wants a domain, he leans over and quietly instructs an associate to bid
on his behalf. He likes wedding names, so his guy lifts the white
paddle and snags Weddingcatering.com for $10,000. Greeting.com is not
nearly as good as the plural Greetings.com, but Ham grabs it anyway,
for $350,000.

Ham is a devout Christian, and he spends $31,000
to add Christianrock.com to his collection, which already includes
God.com and Satan.com. When it's all over, Ham strolls to the table
near the exit and writes a check for $650,000. It's a cheap afternoon.

a few years ago, most of the guys bidding in this room had never laid
eyes on one another. Indeed, they rarely left their home computers. Now
they find themselves in a Vegas ballroom surrounded by deep-pocketed
bankers, venture-backed startups, and other investors trying to get a
piece of the action.

And why not? In the past three years alone,
the number of dotcom names has soared more than 130 percent to 66
million. Every two seconds, another joins the list.

But the big
money is in the aftermarket, where the most valuable names -- those
that draw thousands of pageviews and throw off steady cash from
Google's and Yahoo's pay-per-click ads -- are driving prices to
dizzying heights. People who had the guts and foresight to sweep up
names shed during the dotcom bust are now landlords of some of the most
valuable real estate on the Web.

The man at the top of this
little-known hierarchy is Kevin Ham -- one of a handful of major-league
"domainers" in the world and arguably the shrewdest and most ambitious
of the lot. Even in a field filled with unusual career paths, Ham's
stands out.

Trained as a family doctor, he put off medicine
after discovering the riches of the Web. Since 2000 he has quietly
cobbled together a portfolio of some 300,000 domains that, combined
with several other ventures, generate an estimated $70 million a year
in revenue. (Like all his financial details, Ham would neither confirm
nor deny this figure.)

Working mostly as a solo operator, Ham
has looked for every opening and exploited every angle -- even
inventing a few of his own -- to expand his enterprise. Early on, he
wrote software to snag expiring names on the cheap. He was one of the
first to take advantage of a loophole that allows people to register a
name and return it without cost after a free trial, on occasion
grabbing hundreds of thousands of names in one swoop.

And what
few people know is that he's also the man behind the domain world's
latest scheme: profiting from traffic generated by the millions of
people who mistakenly type ".cm" instead of ".com" at the end of a
domain name.

Try it with almost any name you can think of --
Beer.cm, Newyorktimes.cm, even Anyname.cm -- and you'll land on a page
called Agoga.com, a site filled with ads served up by Yahoo (Charts,
Fortune 500).

Ham makes money every time someone clicks on an ad
-- as does his partner in this venture, the West African country of
Cameroon. Why Cameroon? It has the unforeseen good fortune of owning
.cm as its country code -- just as Germany runs all names that end with

The difference is that hardly any .cm names are registered,
and the letters are just one keyboard slip away from .com, the mother
lode of all domains. Ham landed connections to the Cameroon government
and flew in his people to reroute the traffic. And if he gets his way,
Colombia (.co), Oman (.om), Niger (.ne), and Ethiopia (.et) will be his
as well.

"It's in the works," Ham says over lunch in his
hometown of Vancouver, British Columbia. "That's why I can't talk about
it." He's nearly as reluctant to share details about his newest
company, called Reinvent Technology, into which he's investing tens of
millions of dollars to build a powerhouse of Internet businesses around
his most valuable properties.

New ways to strike it rich on the Web
Ham's reach on the Web -- his sites receive 30 million unique visitors
a month -- it's remarkable that so few people know about him. Even in
the clubby world of domainers, he's a mystery man. Until now Ham has
never talked publicly about his business. You won't find his name on
any domain registration, nor will you see it on the patent application
for the Cameroon trick.

There are practical reasons for the low
profile: For one, Ham's success has drawn enemies, many of them rivals.
He once used a Vancouver post office box for domain-related mail --
until the day he opened a package that contained a note reading "You
are a piece of s**t," accompanied by an actual piece of it.

domainers are one thing, lawyers another. And at the moment, Ham's
biggest concern is that corporate counsels will come after him claiming
that the Cameroon typo scheme is an abuse of their trademarks. He may
be right, since this is the first time he's been identified as the

When asked about the .cm play, John Berryhill, a
top domain attorney who doesn't work for Ham, practically screams into
the phone, "You know who did that? Do you have any idea how many people
want to know who's behind that?"

Spreading the word
Kevin Ham
is a boyish-looking 37-year-old, trim from a passion for judo and a
commitment to clean living. His drink of choice: grapefruit juice, no
ice. His mild demeanor belies the aggressive, work-around-the-clock
type that he is. Ham frequently steers conversations about business
back to the Bible. Not in a preachy way; it's just who he is.

son of Korean-born immigrants, Ham grew up on the east side of
Vancouver with his three brothers. His father ran dry-cleaning stores;
his mother worked graveyard shifts as a nurse. A debilitating illness
at the age of 14 led Ham to dream of becoming a doctor. He cruised
through high school and then undergraduate work and medical school at
the University of British Columbia.

Christianity had long been a
mainstay with his family, but as an undergrad, he made the Bible a
focal point of his life; he joined the Evangelical Layman's Church and
attended regular Bible meetings. Ham recalls that it was about this
time -- 1992 or 1993 -- that he was introduced to the Web. A church
friend told him about a powerful new medium that could be used to
spread the gospel.

"Those words really struck me," Ham says. "It's the reason I'm still working."

he graduated from med school in 1998, Ham and his new bride took off
for London, Ontario, for a two-year residency. By the second year, Ham
had become chief resident, and when he wasn't rushing to the emergency
room, he indulged his growing fascination with the Net, teaching
himself to create websites and to code in Perl.

about Web hosting at the time was so scattered that Ham began creating
an online directory of providers, complete with reviews and ratings of
their services. He called it Hostglobal.com.

From there it was a
short step to the business of buying and selling domains. About six
months after he launched Hostglobal, Ham was earning around $10,000 per
month in ad sales. But when one of his advertisers -- a service that
sold domain registrations -- told him that a single ad was generating
business worth $1,500 a month, Ham figured he could get in on that too.

From doctor to domainer
made sense: People shopping for hosting services were often interested
in buying a catchy URL, so Ham launched a second directory, called
DNSindex.com. Like similar services operating at the time, it gave
customers a way to register domain names.

But Ham added the one
feature that early domain hunters wanted most: weekly lists of
available names, compiled using free sources he found on the Web. Some
lists he gave away; others he charged as much as $50 for. In a couple
of months, he had more than 5,000 customers.

By the time he
finished his residency in June 2000, his two small Web ventures were
pulling in more money in a month -- sometimes $40,000 -- than Ham made
that year at the hospital. That was enough, he reasoned, to put off
starting a medical practice for three more months, maybe six. "It just
didn't make sense not to do it," he says.

With a new baby in
tow, Ham and his wife moved back to Vancouver, settling into a
one-bedroom apartment. Ham's timing, it turned out, was spot-on. Tech
stocks were tumbling, dotcoms were folding left and right, and
investors were fleeing the Web. More important to him, hundreds of
thousands of valuable domain names that were suddenly considered
worthless began to expire, or "drop." Ham and a handful of other
trailblazers were ready to snap them up.

Figuring out when names would drop was tedious work.

the time, Network Solutions controlled the best names; it was for a
long time the only retail company, or registrar, selling .coms. It
didn't say when expiring names would go back on the market, but twice a
day it published the master list of all registered names -- the
so-called "root zone" file (now managed by VeriSign (Charts)). It was a
fat list of well over 5 million names that took hours to download and
often crashed the under-powered PCs of the day.

So Ham wrote
software scripts that compared one day's list with the next. Then he
tracked names that vanished from the root file. Those names would be
listed briefly as on hold, and Ham figured out that they would almost
always drop five or six days later -- at about 3:30 a.m. on the West
Coast. In the dark of night, Ham launched his attacks, firing up five
PCs and multiple browsers in each. Typing furiously, he would enter his
buy requests and bounce from one keyboard to the next until he snagged
the names he wanted.

He missed a lot of them, of course.

had no clue that there were rivals out there who were way ahead him,
deploying software that purchased names at a rate that Ham's fingers
couldn't match. Through registration data, he eventually traced many of
those purchases to one owner: "NoName." Behind the shadowy moniker was
another reclusive domain pioneer, a Chinese-born programmer named Yun
Ye, who, according to people who know him, operated out of his house in
Fremont, Calif.

By day Ye worked as a software developer. At
night he unleashed the programs that automated domain purchases. (Ye
achieved deity status among domainers in 2004 when he sold a portfolio
of 100,000 names to Marchex (Charts), a Seattle-based, publicly traded
search marketing firm, for $164 million. He then moved to Vancouver.)

went back to the keyboard, writing scripts so that he, too, could pound
at the registrars. Ham's track record began to improve, but he still
wasn't satisfied. "Yun was just too good," he says.

Then Ham did
something brash: He bought his way to the front of the line. Since
registrars had direct connections to Network Solutions's servers, Ham's
play was to cut out the middleman. He struck deals with several
discount registrars, even helping them write software to ensure that
they captured the names Ham wanted to buy during the drops. In exchange
for the exclusivity, Ham offered to pay as much as $100 for some names
that might normally go for as little as $8.

Within weeks Ham had
struck so many deals that, according to rivals, he controlled most of
the direct connections. "I kept telling them to hit them harder," Ham
says in a rare boastful moment. "We brought down the servers many
times." During one six-month period starting in late 2000, Ham
registered more than 10,000 names.

Rival domainers, locked out
of much of the action, didn't appreciate Ham's tactics. It was one of
them, most likely, who sent him the turd. "Kevin came in and closed the
door for everyone else," says Frank Schilling, a domainer who figured
out what Ham had done and sealed similar deals. "There was a ton of
professional jealousy."

Ham, in fact, owes a lot to Schilling.
Both men lived in Vancouver at the time, and after Ham sought out
Schilling in November 2000, the two met at a restaurant to compare

"How much traffic do you have?" Schilling asked. An
embarrassed Ham replied that he had no idea. Schilling mentioned that
he was experimenting with a new service, GoTo.com, that would populate
his domains with ads. Ham spent the next week figuring out how much
traffic his sites were generating, and he was amazed by the initial
tally: 8,000 unique visitors per day from the 375 names he owned at the

"From then on," Ham says, "I knew that what I was building
would be very, very valuable." He soon signed up with GoTo (which was
later purchased by Yahoo). On his first day, Ham made $1,500.

system worked then as it does now: People don't always use Google
(Charts, Fortune 500) or Yahoo to find something on the Web; they'll
often type what they're looking for into a browser's address bar and
add ".com."

It's a practice known as "direct navigation," or
type-in traffic, and millions do it. Need wedding shoes? Type in
"weddingshoes.com" -- a site that Ham happens to own -- and you'll land
on what looks like a shoe-shopping portal, filled with links from
dozens of retailers.

Click on any one of those links, and the
advertiser that placed it pays Yahoo, which in turn pays a cut to Ham.
That single site, Ham says, brings in $9,100 a year. Small change,
maybe, but the name cost him $8, and his annual overhead for it is
about $7. Multiply that model several thousand times over, and you get
a quick idea of the kind of cash machine that Ham was creating from his
living room.

By early 2002, roughly $1 million a year was
pouring into Ham's operation, which he ran with the help of his high
school friend and current partner, Colin Yu. But again he felt the tug
of his conscience. He occasionally left Vancouver to do medical
missionary stints, helping patients in Mexico, the Philippines, and
China. He found the experience rewarding, but the development boom he
saw taking off in China just reminded him of the virtual real estate
boom he was leading back home.

Soon Ham was back working full-time on the Web. "There was just too much more to do," he says.
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