3 Domain Name Thoughts for Startup Founders

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It’s partly frustrating and partly amusing to see criticism of domain investors and domain speculators from startup founders who are irritated that they can’t get their desired domain name at a bargain price. Some seem to feel like they are more deserving of specific domain names.

I want to share three thoughts about this, and I welcome your thoughts as well – even if we disagree. I am sure this isn’t the first time these things have been said, but they are worthy of consideration:

  • If the success of a startup is contingent upon using a specific domain name, perhaps the business plan needs to be revised. There have been countless startups who built their businesses on less than ideal domain names, and they upgraded to a better domain name when they could afford to pay for it.
  • The startup should be lucky a domain speculator / investor owns a specific domain name rather than a major company like Oracle or Microsoft. It is far more likely they will be able to make a deal that moves the needle for a domain investor than it would be for a major corporation.
  • There are countless real estate developers who would love to be able to go back in time and secure prime pieces of real estate so they could build beautiful and useful buildings. Buying domain name is like buying land. At one time, there were far fewer land owners, but people made them fair offers, and they sold their rights to that land.

I think a domain name is an important part of a business, but it should not be the most important part of the business, unless the founder of the business already owns the domain name. There are quite a few domain names I wish I had the foresight to buy years ago, but I am not going to begrudge the owners simply because they bought those domain names in years past.

There are many deal structures that can be put into place to make a deal that makes sense for all parties. Instead of lamenting the fact that a domain name is owned by a domain investor, that time is better spent negotiating in good faith to secure the rights to the domain name.

1 COMMENT

  1. Well said, Elliot.

    The one thing I would add here is that startup founders need not feel like they have to come up with a name and procure the matching domain name for their company all by themselves. There are professional naming specialists and experienced domain buyer brokers out there that can help startups with this stuff, not to mention a ton of brandable name marketplaces and self-serve tools that can help.

    This stuff doesn’t have to be costly or time-consuming if you go about it the right way or work with the right people to help you.

  2. A great domain names are similar to race horses. Their full potential is only realized when they have the right jockey, trainer and stable behind them.
    One without the other may still do well but when joined the magic happens.

    • Well put Robin. Having a great domain for an online project is an important part of the mix, but will not make the project successful by itself. I can safely say that from my own experience.

  3. As an addendum to point #2, be glad that the domain is in a domain investor’s possesion and not your direct competitor. I would think the price would be much heftier in that case. In the case of a Corp, good luck finding the decision maker to even make an offer.

  4. I agree somewhat. I think one of the biggest problems with using the real estate analogy is that a great piece of property wasn’t bought for 100 bucks and then only cost 100 bucks to maintain it yearly and the older it got the lower the maintenance fee became.

    A piece of real property that was bought for let’s say $5,000 about 20 years ago would never ever be worth 1,2 5 million dollars. but when these startups inquire about a name and they get back a huge price tag and the owner tries to justify it with the real estate analogy they go on the defensive.

    Let’s be realistic the real estate analogy is ridiculous. I can’t count the number of times I’ve heard it by domain investors. I think you should start a new post of what is a great analogy that can be used as an example in a negotiation of a domain name.

  5. Todd, I’ve seen real estate in at least 4 states that was far less than 5k/acre 20 years ago sold for well over a million dollars. Just like domains, you are speculating on location, traffic patterns and potential… Most will never pan out, but some will be gold.

  6. One more thought, though: there are certain domains and certain subject matters for which the name itself is practically indispensable and one of a kind if one wants to be the market or industry leader. Let’s take RS’s Candy.com, for instance. Sure, one might have good names like “sweets.com” or “sweettreats.com,” but there is only one Candy.com, and Candy.com rules them all. And there are numerous examples like that.

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