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What’s Next for Ethos

Since last fall, Ethos has actively engaged with ICANN and .ORG communities regarding our proposed acquisition of Public Interest Registry (PIR). Through that process, we demonstrated our desire to ensure that .ORG continues and thrives as an exemplary service for the mission-driven community. ICANN has now declined to consent to the proposed change of control of PIR. We respect the ICANN multistakeholder model, but we disagree with and are disappointed by ICANN’s decision. What is more worrisome is not the decision, but the path and the motivations behind it. We hope that together we can pivot and refocus our efforts to strengthen ICANN’s bottom-up multistakeholder model.

Throughout this process, we listened intently to the .ORG community and responded accordingly. We offered to make unprecedented legally-binding commitments through a Public Interest Commitment (PIC) because we respect this community and its important role in shaping the Internet ecosystem and serving the non-profit and mission-driven organizations. Moreover, this community would have been our customers. We were prepared to do everything to keep our customers satisfied.

Our original motivation for investing in PIR was our desire to support and uphold the visions of PIR and ISOC. We saw an opportunity to support PIR’s growth and expansion through reinvesting its revenues in the .ORG platform. We believed that new investment and innovation could deliver significant benefits for the .ORG community while maintaining the Registry’s core values of stability, security and reliability. We wanted to build an even stronger .ORG and enhance the benefits it offers to the .ORG community and users around the world. We also believed that ISOC would benefit from this partnership. The proceeds of the sale would have been used to further ISOC’s mission and help enable an open Internet for all.

We would like to thank both the leadership and teams at the Internet Society and PIR for their partnership over these past several months. The Internet Society and its team’s steadfast commitment to making the Internet accessible to all and to promoting it as a resource to enrich people’s lives should be commended and sustained. We admire the dedication of PIR’s team to its mission of empowering people who are committed to improving our world. By providing a secure, stable and reliable online platform for mission-driven organizations, PIR has been a champion for the .ORG community. We are confident that PIR will continue to be a strong advocate and ally for .ORG registrants.

Ethos was founded as an investment firm focused on helping companies drive growth and transformation, while committing to operate ethically, responsibly, and in the best interests of all our stakeholders. We believe there is a balance between the typical metrics of success, such as financial growth and profitability, and socially responsible initiatives. We want to make it commonplace to hear the terms “public good” and “profit” together. We planned to use our investment in PIR as an opportunity to demonstrate Ethos’ values fully—that prosperity can be built and shared, and innovation has the power to fuel growth and success for all. While this opportunity with PIR has passed, Ethos’ work will continue, and we look forward to building new partnerships where we can demonstrate that doing “well” and doing “good” can go hand in hand.

By Erik Brooks, Founder and CEO at Ethos Capital

Filed Under


Dear Mr. Brooks:I’m a .org registrant and Greg Thomas  –  May 12, 2020 8:38 PM

Dear Mr. Brooks:

I’m a .org registrant and longtime contributor to Internet and DNS policy (some might say I’m the community crank), and, not having fallen off the turnip truck last night, I am deeply concerned whenever representatives of shadowy moneyed interests talk about “strengthening the multistakeholder model.”  My concern is particularly heightened when said representative of shadowy moneyed interest makes such statements in the context of having been denied something desired.  Setting all that aside, I’ll offer a few insights for your post-mortem analysis — free of charge.

Lord knows that the multistakeholder model is not without its faults, but, in this particular instance, it worked as intended.  What inhibited your transaction, rather, was a veritable grab bag of unforced errors that belied what would otherwise have been a fairly decent marshaling of optics and retail politicking. 

First, it’s all about people.  Ethos’ initial significant misstep was allowing Fadi to bring it anywhere near the DNS. This is because, while on paper it may appear that he would be the perfect Sherpa for the type of deal you tried to accomplish, in reality he left ICANN deeply mistrusted by a wide cross-section of the community. This lack of trust is well-founded considering that his tenure is marked by rampant cronyism, cynical opportunism, and — after leaving early and abandoning the organization in the final days of the IANA transition — a legacy of an organization somehow less than it was when he took the reigns. Newly independent but saddled with enormous payroll costs and other expenses that continue decimating the balance sheet that were justified by overly rosy revenue projections to come from what turned out to be an albatross of a new gTLD program injecting into the market an enormous volume of new supply in search of demand.  The repercussions of his tenure are still being discovered — let alone addressed — and likely have shackled ICANN and the DNS for some time yet to come.

Ethos also relied heavily on proposed “binding” Public Interest Commitments and sought to leverage Fadi’s hand-picked Compliance soothsayer, Allen Grogan, for seeking community acquiescence.  Yet, Ethos failed to consider that Mr. Grogan was a well-known skeptic of PICs as ICANN’s most senior leader of contractual compliance and, had you asked, any number of people might have pointed out that he had stated publicly — on more than one occasion — that PICs are unenforceable. 

Regarding the additional new community resources in the amount of $10 million, it seems a bit paltry — perhaps even slightly insulting — when you consider that ICANN’s recent $20 million payday is twice that. 

Ethos also reveals nothing but inexperience with running a registry by referring to .ORG registrants as “customers.”  At least for the legacy registries, registrants may be users, perhaps, but they are not customers.  Although, because of the high number of mission-driven organizations who rely on .ORG — as opposed to, say, .COM or .NET which tends to be more commercially-driven — Ethos may have had its hands full with mission-driven registrants armed with torches and pitchforks once it became clear what was actually meant by the artfully constructed phrase “no more than 10% on average” with respect to pricing — the “on average” part being the real kicker and where potential future mischief would likely occur, but I digress. 

If you get the opportunity, and you choose to let it, then experience will teach you that the customers of a domain name registry — particularly legacy registries —  are the registrars. Registrars are the workhorses of the DNS and are too often unrecognized, under-appreciated, and undervalued for the role they play in the ecosystem.  You see, registrars actually compete in the market and, as such, must undertake costly activities like marketing and customer service. Registrars have to worry about margin and managing expenses is an existential exercise.

Legacy registries are monopolies granted by the U.S. government whose startup costs were underwritten by the American taxpayer that have become anticompetitive, oligarchic monstrosities that print cash while every other market participant does all the work. As a private equity guy, I’m sure you view this with professional envy — who wouldn’t like to print cash like the Fed engaged in quantitative easing? 

But when you zoom out a little and get some perspective, you might remember that competition and innovation are the twin engines that drive virtuous prosperity. However, legacy registries don’t compete and, having worked for the biggest domain name registry (twice) I couldn’t point to anything resembling innovation if my life depended on it.  This means that enormous value is being taken out of the economy — out of circulation, essentially — without any commensurate value being provided in return. In the global “new normal” — where recession is the optimistic view — how much longer will such economic injustice be overlooked before Leviathan reaches out its heavy hand?  In the final accounting, Ethos may have dodged a bullet. 

In any event, hope these insights offer some additional food for thought. Better luck next time — and welcome to the global community of DNS stakeholders.

Greg Thomas

How come you didn't bring any substantial Kevin Ohashi  –  May 16, 2020 10:16 AM

How come you didn’t bring any substantial innovation to Donuts with its hundreds of gTLDs? If the excuse is it didn’t have the registration volume of .ORG are you really bringing innovation or simply imposing things on customers who are locked in without a reasonable alternative?

While we’re on the topic, your original motivation was helping PIR and ISOC and not profit? That would be a hard sale.

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