There are several startups currently interested in one of my domain names, and I am in discussions to sell it. None of these startups seem to have the capital available to make the purchase, but I am very confident one is going to be able to come to terms with my company in the next couple of months. My bet is that the deal I strike will likely be some sort of creative financing option, although I would be very happy to sell it outright.
While all of these startups understand the value of owning the brand match .com domain name, I don’t think any of them are looking at the biggest picture. I want to share this with you (without mentioning the specific domain name) because I think it is a good talking point on your own negotiations.
Out of the five businesses I am actively discussing this domain name with right now, four share the same name that matches my domain name. All of these businesses have inquired about the domain name directly or through a broker. There have been quite a few other inquiries, but these are the ones that are active.
Some businesses tend to look at a major domain purchase as optional or a “nice to have” asset rather than a necessity. That’s all well and good until one business gets the brand match .com domain name and becomes THE brand in that space. When that happens, the other companies will quite possibly have to rebrand, which is expensive and creates a diversion from running the business. A rebrand is almost certainly necessary when there are two companies with the exact same brand name in the same relatively niche field.
I mentioned that there are currently five active negotiations with four companies sharing the same brand name. The fifth company is operating on a totally different brand name with a non-com domain name. In speaking with one of that company’s principals, the reason for their total rebrand is because a major company shares its brand name, and that company absolutely owns and dominates the branding. This startup would either get confused for that company or could potentially face legal issues if it continues to grow.
In essence, this fifth company is forced to do a rebrand because it doesn’t own the .com domain name and related brand, which is almost certainly what will happen to the other startups who are trying to buy the same domain name.
I think it should be pointed out that when one brand gets the brand match .com domain name, it will be more difficult for the other brands to compete. I think and hope these active negotiations will end up in a deal. If one of these startups was smart and can’t afford to buy my domain name outright at this moment, they should lock in a lease to own and/or option to buy the domain name for a set price in the future. Obviously, I am biased, but it makes sense.
> Some businesses tend to look at a major domain purchase as optional or a “nice to have” asset rather than a necessity
Could be true and could be their negotiation tactics.
Same advice works for plumbers
There were a bunch of companies using “Deeper” who inquired to upgrade to Deeper.Com, all thought the low six figure US$ was too expensive.
Someone else bought it (NSFW) and if I had a company named Deeper, I would be running for the exits just about now.
I’ve enjoyed similar dilemmas in the past. (but not 5 at one time). I was able to get more action out of one of them by offering to forward the domain in question to their existing website so they could “try it on for size” for a month, It grew on them pretty fast.
DomainGiving(.com) and DomainPhilanthropy(.com) ……..coming soon
Are both “try it on for size” marketplaces that will accommodate reluctant, but honest and trustworthy decision makers.
i hope you get the price you’re seeking, elliot
My advice is the following: It sounds like you are overselling the name, trying to get the buyer to “see the bigger picture”.
The way to get a higher price is to walk away. The way to get a lower price is to get into discussions and take on board the BS that buyers and brokers say. Leave it alone for a few years and see what happens.
I’m not doing any selling at this point. All parties know what the expectations are.
Well I don’t know, the whole article seem like a sales pitch to me,
“Lock in the .com to Save on a Rebrand”.
“While all of these startups understand the value of owning the brand match .com domain name, I don’t think any of them are looking at the biggest picture. I want to share this with you (without mentioning the specific domain name) because I think it is a good talking point on your own negotiations.”
If you are using this argument buyers it will weaken your position. It will likely improve the chances of a sale but it is going to come at the cost of price.
I guess it is a bit pitchy in a sense but not aimed towards these specific prospects. I think it’s something I wish they would realize.
On a side note, I may not optimize every sale like Rick S and a few others, but I have been fortunate to have made up for what’s left on the table with the volume of deals.
Don’t know the status of these specific negotiations, but here is a situation I ran into when negotiating the sale of Power.com a few years back.
We had narrowed the candidate(s) down to one that i) made the most sense and ii) could afford the purchase price.
At some point, the lawyers got “overly” involved and were looking at as many past iterations of the domain as possible, trying to find whatever skeletons in the closet that could be found, all in an effort to prolong the negotiations and/or to lower the price.
At one point I said, enough is enough. This domain will sell for this price on or before this date. If not, the price goes to “$X” and will only escalate from there.
The deal was done in 2 days.
It’s amazing how setting a definitive date can help to close a sale.
As alluded to earlier, taking away the ability to negotiate can be a powerful motivator to move to a close sooner rather than later. (fwiw – it also helped that the seller was in no great hurry to sell 😉
I think in Elliot situation though he is pre contract. I can see how that would work to get a contract finalised but in terms of negotiation setting a deadline could easily backfire if you they just decide to let the deadline pass.
Elliot, what about trading for equity in the company? Consider a lower price plus some equity?
Depends on a number of factors, but that always makes things more complicated.
I don’t think founder would pay more because part of it is equity, especially if VC backed. Definitely complicates things also. Worthwhile if you really loved the company’s plans and want to invest.
Equity is always risky, especially when it comes to dilution, a good percentage of new ventures fail.
If there are literally 5 suitors at once, why in the world would you not start an auction for competitive bidding and direct them to it? Isn’t that the most desired situation possible for maximizing the potential price?
If none have the ability to make the deal I want and expect at the time of an auction, it would either produce a less than ideal result or show all parties that none of them are willing to pay my price. If I needed to sell or was willing to take a best offer, that might work I suppose.
I believe I will get my desired outcome eventually, so I will wait until I get an acceptable offer.
“it would either produce a less than ideal result or show all parties that none of them are willing to pay my price”
It’s understandable to be concerned about that, but…
-Some of them are BSing you about what they are really “able” to do.
-You set a minimum bid that you are confident they will be comfortable with, along with a reserve that you are comfortable with.
-You direct them to the auction, then this may (likely) happen:
-One or two post a bid
-They all see that someone else may wind up getting it now – can’t have that
-Bids start coming in
-People start soul searching about the extent to which they know they maybe BSing both to you and even to themselves about what they are really able to do.
-It becomes clear it’s now or never, once in a lifetime, very possibly “game over” after this.
-Genuinely desirable quality competitive bidding occurs – and even goes much higher than you ever thought possible without it
Sure, and what if I do that and nobody bids? Then I’ve created a situation where they perceive the demand is low and/or my price is too high.
I would rather wait until one of them realizes the importance of the domain name. This will likely happen as they are discussing another (big) round of funding.
I am not in a rush to sell the domain name. Even if I had some sort of cash crunch, I have other liquid names to sell in addition to less than ideal offers on other domain names. Fortunately, I do not find myself in a position like that.
All that said, if the situation were much different, an auction could theoretically work, but it could also backfire.
Okay, fair enough. Because I am a seeker of truth with an open mind and always seeking to be “mentally honest” since we are literally *all* prone to the opposite according to our original defective “factory settings” in this life, you have persuaded me. How many people ever say that instead of just digging in and doubling down, ay?
That would almost certainly result in a low price.