How To Lose A Six-Figure Deal

I am helping an awesome startup that is looking for a new domain for their company. They just raised a significant funding round and now see themselves in the position to spend into the mid six-figure range for a good domain name. The founders are some of the nicest and passionate people I’ve ever met, and this week they told me an interesting story that I thought would be good to share with all of you.

This is the story of how you can lose a six-figure deal and it extends beyond domains to just about anything. I spent nine year closing monster deals for Sonos and if there was one mantra I heard time and time again it was, “Businesses don’t do business with businesses, people do business with people.”

The company was going back and forth between two names before they contact me, once they reached out to me they had narrowed it down to one. The reason why they had dismissed the other domain wasn’t because they no longer liked it, it was one of their two top choices, it was because of how rude the owner was.

When the startup first approached the domain owner it was their first time ever emailing someone about a domain. So they sent a friendly email asking the owner if they were willing to sell and what price they might be looking for. Here’s the response they got:

“If you really wanted to buy this domain you would have made an offer, you should find another domain.”

So they emailed back an offer of $25,000 which to them seemed like a good starting point. Here’s the next response:

“I do not want to waste my time negotiating with you so please find another domain.”

If the owner had just responded back asking them for an offer in the six-figure range, they would have done it, but instead they decided that life is too short to work with people like that. They bought the other domain they were looking at and even spent a bit more than they had planned but they bought it from someone that they were comfortable doing business with.

And that’s how you lose a six-figure deal.

Whether you are selling domain names, rare coins or fine art, turning an interested buyer into an uninterested customer is about as bad of a business mistake as you can make. There are a lot of great people in this industry who represent all of us well and make the rest of the world see us in a better light. However it just takes a few people like this to make smart founders and investors assume that most Domainers are bad business people.

As always I’d love to hear from you, comment and let your voice be heard!

Morgan

Co-Founder at Fashion Metric
Morgan Linton was born in Berkeley, California but spent nine years traveling the world as an early employee for digital music startup Sonos. In 2007 Morgan founded Linton Investments, a domain name and branding company that has helped some of the most recognized startups in the world acquire their top choice domain name. In 2012 Morgan left his full-time job to co-found Fashion Metric, a next-generation platform aimed at changing the way guys shop for clothes online.

{ 22 comments… add one }

  • Troy March 8, 2013, 3:55 pm

    Or that is the Rick Schwartz method to sell for a million… it matters how you look at it.

  • Carlos March 8, 2013, 4:23 pm

    LOL. Sounds like Rick’s method indeed. Who knows, maybe they were trying to buy a domain like rings.com for $25K…

  • Tony March 8, 2013, 4:34 pm

    Agree with first two commenters.

    If we don’t know what the said domain is and/or its value, who’s to say it’s not a 7 figure domain that this company offered $25K for?

  • Friendly friend March 8, 2013, 4:35 pm

    You never lose what you never had. The guy never had a six figure deal to begin with so he couldn’t have lost it. Whatever he did was negotiation. One says “I don’t negotiate..” guess what? It’s negotiation. I don’t see an issue with how he responded. It’s how he chose to play his cards and it didn’t work out. Happens all the time.

  • Morgan March 8, 2013, 5:06 pm

    @Troy – I don’t think Rick handles deals this way, Rick is a very good businessman and knows how to do great deals. I think the guys at Candy.com enjoyed working with him as do most people who do business with him.

    @Tony – it was a domain that I think most of us could see falling in the five to six-figure range.

    I did plenty of six-figure domain deals last year and worked with some great Domainers who were a pleasure to do business with. The point here is, if you’re an asshole, people won’t want to do business with you whether you’re selling domains or anything else.

  • Eric March 8, 2013, 5:16 pm

    That kind of out-of-the-gate rudeness is never called for. Some people make low-ball offers to see if they can get away with it, but you gotta figure that some people do it because they honestly don’t know what the domain is worth.

  • Morgan March 8, 2013, 5:23 pm

    @Eric – that’s my point. It’s easy to forget that the average person knows next-to-nothing about domain names. A $25k offer isn’t necessarily someone low-balling, it’s just someone trying to get started in a negotiation.

    I’ve heard of $500 offers ending in $500,000 deals so you just never know who you’re working with. Being rude, to someone that wants to buy something from you is a business lesson that really should just be common sense.

    So far a vast majority of the startups I have worked with have heard of Domaining.com, DNJournal, Rick or Frank.

    Just like many Domainers don’t know huge startup super-stars like Eric Ries and Steve Blank, they don’t know about us.

  • adi weitzman March 8, 2013, 5:25 pm

    Morgan,

    I’m assuming the potential sale was for a .com? Also you mention startups in your previous posts I woul be interested and I’m sure others would be ito if you could profile 3 or more startups with brandable or generic domain names.

  • Morgan March 8, 2013, 5:25 pm

    @Friendly friend – so true, anyone can play their cards this way and lose a six figure deal. Hence the title of this post, How To Lose A Six-Figure Deal. He was the first person the startup contacted so if he had just been a nice normal person, he would have had a six-figure deal.

  • Eric March 8, 2013, 5:33 pm

    I agree with you totally, Morgan. I think the earlier comments that reference Rick Schwarz were referring to the claim he’s made on his blog that he’s rude to people who approach him to buy domains. I think his thinking was that rudeness weeds out people who aren’t serious. It seems to work for him. But it’s a strategy that probably shouldn’t be used except by wealthy mofos who don’t care if they ever sell another domain.

  • Morgan March 8, 2013, 5:42 pm

    @adi – lots of great examples and a great idea for a future post!

    @Eric – I think Rick is only rude to people that give ridiculously low offers on huge names and I don’t think he’s rude unless they are rude to him. I have an incredible amount of respect for Rick and think he’s one of the best negotiators and businesspeople out there.

    This particular domain is one that I think many investors would say could sell for $50k – $100k based on previous sales so $25k really was a meaningful offer…and there probably aren’t many other buyers that would have paid six-figures for it.

    And even wealthy mofos like mid six-figure deals :)

  • Godwin March 8, 2013, 5:45 pm

    I think if I was me and its my first domain,that’s a jackpot and I would handle the whole transaction carefully and increase it a bit and ask for their final offer.Maybe the domain owner didn’t take them serious and has attitude problem.No matter how sweet a domain name sounds,I would still respect the client when the price range is above $25k and someone offers this much.

    Morgan want to comment that I bookmarked your site so I can easily go straight everyday.I am building up interest and gathering some money to move in positively into this business,carefully and cautious and ready to take risk as it is a business.

    I enjoy alot from here.

  • Morgan March 8, 2013, 6:18 pm

    Thanks @Godwin – completely agree with your approach, thanks for bookmarking me, looking forward to sharing the adventure together!

  • owen frager March 8, 2013, 6:25 pm

    “Make me an offer” is the biggest roadblock to domain sales. Better to respond- give me your number and I’ll call you to discuss.

  • Morgan March 8, 2013, 7:42 pm

    @Owen – spot on! That’s how deals are done, and really that’s how people do business with people.

  • Tarik March 8, 2013, 10:44 pm

    He told your client to “find another domain.” He got what he asked for. Why is everyone else confused?

  • Anthony March 9, 2013, 4:46 am

    How can someone who is willing to make an offer of $25,000 in their second email be a time waster? The same effort (10 seconds) it took the guy to write he doesn’t want to waste his time could have been spent writing an email saying he wouldn’t consider less than 6 figures.

    Manners cost nothing, please, thank you, polite and professional.

  • jimmy March 9, 2013, 3:30 pm

    amazing how rude so many domainers are. and then they typically won’t have the nuts to put their real name on statements like that also. hiding in their parents basement thinking they are a genius because they registered this name… domainers should be forced to go to a business 101 class before listing their domains for sale.

  • Morgan March 9, 2013, 6:05 pm

    @Jimmy – people can be rude, it’s okay, everyone is entitled to their opinion and I respect that. That being said, I can’t tell you how many Venture Capitalists, CEO’s, and Startup Founders have told me that Domainers are famous for being terrible business people. I’m trying to change that thinking! :)

  • Morgan March 9, 2013, 6:07 pm

    @Anthony – completely agreed. All he needed to say was, “make me an offer in the six-figure range.”

  • DM. March 10, 2013, 7:24 am

    Unprofessional responses like that are probably the product of endless enquiries from time wasters. If you can’t send a civil response then maybe create a professional auto signature you can use instead. If its a hard ball strategy then it misses the mark by a long way in my opinion.

  • Rich March 12, 2013, 9:23 am

    The bid was rude and the answer was rude. One doesn’t go to a property owner of some real estate and low-ball as if the owner has no idea what the value of the property is worth. More than one real estate owner will turn down the bid out of hand. On the other hand, there are ways to turn down a bid and there are ways. A simple, no thank you would have sufficed.

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