Don’t Buy a Domain Name with One Buyer in Mind

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When buying one word .com domain names, I like to ensure there is either a great deal of usage for the keyword in brands or that I can envision the domain name being used as a new brand by a major company. One thing I try to prevent is buying a great domain name where there is only one prospective buyer.

I know some people in the business of domain investing target good domain names that match the brand of a hot startup. By way of a hypothetical example, they might see a company called AAAAAA (made up) that operates on an inferior domain name and purchase the exact match AAAAAA.com with the hopes of selling it to them in the future. The thinking is that if AAAAAA becomes super successful and either starts making serious revenue or gets significant funding, AAAAAA.com will be worth much more.

There is some risk to this strategy. If AAAAAA becomes a widely known brand, it may prevent other companies from using that brand name. If AAAAAA

won’t buy the AAAAAA.com domain name, there aren’t going to be nearly as many prospects willing to pay for that domain name because AAAAAA is the dominant brand and other companies are staying away from the brand.

The other risk is that AAAAAA could be acquired by a major company as a result of its success. When this happens, the buyer sometimes folds the brand into its own brand, and the AAAAAA branding disappears. Companies may be reluctant to re-use that brand name because of the recently acquired brand (and IP rights were bought by a big company), and the acquired company may no longer have any need for the AAAAAA.com domain name.

Buying a domain name because a startup uses that branding but didn’t buy the exact match .com domain name has risks. When I am evaluating domain names to buy, my preference is to buy generic keyword .com domain names that would have many prospective buyers. If one goes out of business or is acquired, there are other prospects out there.

1 COMMENT

  1. Sadly, I see a lot of newer investors buying based on similar cases like you outlined and then get stuck with a loss at the end of the year. Great advice not to focus on a single buyer.

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