Partnerships can be a great way to leverage a domain name with another company’s labor, intellectual property, financial accumen, and experience. When successful, they can lead to substantial revenue growth and a well developed website. There are a number of partnerships within the domain industry including:
Monster Venture Partners & Castello Brothers – Traveler.com,
WashingtonVC & Internet Real Estate – Phone.com & Software.com
There are a few things I can think of when it comes to partnerships that people should consider.
Set benchmarks – If you agree to a partnership and you give up ownership in exchange for a website that doesn’t drive additional revenue, there really is no purpose for the partnership. Make sure you set benchmarks for revenue, and reward more based on success.
Create contingency plans – If for some reason, one partner will not be able to fulfill obligations, there should be something in writing that determines what will happen. Many things come up, and you want to protect your rights.
Set timelines – If your project suddenly becomes backburnered, you should have recourse to ensure that you aren’t obligated to continue a partnership when it’s clear that your site isn’t a top priority and won’t be ready when expected.
Reward excellence – If the new website generates much more revenue than expected, you should want to pay a larger percentage of the earnings to reward success and encourage outperformance.
What else do you think is necessary when working with a partner?
Great info, Elliot.
I’ve cut and pasted it for future reference.
Thanks for sharing.
Looking forward to the comments on this one.
Good post Elliot.
Have you gone into partnership on any of your names yet? If so i was wondering who you use to draw up the contract and what sort of timelines and benchmarks have you listed?
I brought on a partner for Torah.com. We are working on that site.
i would think cost-sharing might be a thorny issue, particularly as it relates to potential legal/trademark issues – assuming there are two partners, would costs be shared 50/50?
I agree that this can be thorny – especially when one partner might supply the labor. Does he bill at regular rates or at his cost? In many cases, the original owner of the domain name agrees to give the parter a % of the domain name and business once certain development hurdles are achieved, which would alleviate this. However, the potential for legal and other costs could be very high in the event of a lawsuit. These are the types of things that need to be discussed and put in a contract, as one partner might not be able to afford a huge legal bill, whereas the other might.
I always think it’s better to discuss these things beforehand.
‘Partners’ seems to also be a good excuse for people backing out of deals as I have learned a few times.
I’ve just seen that tropical birds is now top of the tree on Google for the term. Congratulations there. Just out of interest how much daily traffic is the site pulling in?
Do you (or anyone else) have a generic/standard agreement format that you can share here for domain development partnerships?
That will be great.
I don’t have a boiler plate agreement, but I really think there are too many moving parts to not work with an attorney on an agreement of this nature.
I like Elliot’s point about rewarding excellence. That most certainly puts a good foot forward and could enhance the partnership. To be compensated for hard work and results keeps the producing partner invested in the process of taking the business forward to new levels.
Partnering is an interesting concept in itself. Not sure of all the critical ingredients but similar vision, good mutual communciation, and sustained commitment to the goal seem pretty important. And good ethical base, integrity, honesty among partners
Great post, informative post. Thanks.