Don’t Suggest Your Domain Name for a Friend’s Startup

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When a personal friend mentions a search for a brand for a new business or a rebrand of their business, you might want to think twice about mentioning one of your domain name as an option. It may be nice to offer an assist to a friend who might be in the market for a domain name, but the offer could backfire if it is considered.

Domain name negotiations can be challenging, even under good circumstances. Trying to come to terms on the sale price of a domain name is usually difficult. The buyer, who may be constrained by the acquisition budget, business partner, or supervisor, wants to pay as little as possible. The seller needs to get the best possible price for a domain name, particularly on irreplaceable assets. Working with an unknown counter-party is tough, but negotiating a business deal with a friend poses unique challenges.

When a domain investor offers up a domain name for consideration to a friend, the friend probably thinks a “friends and family” deal could be had. It’s one thing if you’re selling replaceable widgets, but with a unique asset like a domain name, this kind of deal is not feasible. Domain names are not easy to replace, so there’s a huge opportunity cost when discounting the asset for a friend. It’s easy to walk away from an unknown third party when you aren’t close on valuation, but it’s much more difficult with a personal friend who really wants the domain name for a good price.

Every conversation with a friend will turn into a negotiation for the domain name. It can put a strain on a friendship, particularly if the friend thinks the domain name was offered up because a good price would be given. Complicating things further, a friend who knows about the domain name business would likely know it’s a straight up financial consideration that is being made in the negotiation. When domain investors can sell their assets for at least 10x the acquisition cost, it might rub a friend the wrong way when the price is fairly inflexible.

I wouldn’t offer up one of my better domain names for a friend looking for a rebrand or a new brand. I might offer up something I think is easy to replace, but I don’t want to muddy up a friendship by negotiating with a personal friend on a unique domain name.

About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn | Email

6 COMMENTS

  1. I gave two of my domains for free on the same day in 2014 to two friends for their respective startups that at the time were mere executive summaries with no funding, zero employees

    One has become a major media company with a valuation north of 100 million usd
    The other a tech company with millions in revenues and a valuation over 5 billion usd

    I did ask each to make a 200 USD tdonation o a health charity I support

  2. Great twofer Steve !
    I bet it takes you to the moon every time you get to think about it ! The benifit side of the equation 😉

    “negotiating a business deal with a friend poses unique challenges” agree,
    However,
    ” When a domain investor offers up a domain name for consideration to a friend, the friend probably thinks a “friends and family” deal could be had” –

    that is exactly what the intent would be if it was “offered up” in my world

    “a huge opportunity cost” +/- “benefit” is the other side of the equation

    Cheers

  3. 168,

    I had handregged both names for a possible video news app, so it’s not like I gave them domains I had purchased on the aftermarket.

    What was surprising:
    both domains for startups that will prob IPO within 2 yrs.
    for one domain, this was the young woman’s first startup – and it will either go public or get acquired by google or a media conglomerate
    for the other domain, this was the guy’s third startup (2 big time exits and this one which i predict will be worth 100 billion usd in 2 years) – and my friend is only 31…he was one of the top coders in usa at age 9, graduated from stanford in 3 years while building one of the top sports sites/apps in world, acquired by time-warner…age 21, he was already mucho financially secured for life..good guy and he married his first gf, his college sweetheart

    they’re decent names, but def not premiums..both are .com

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