Startup Monday: Domains and Startups

I’ve been doing Startup Monday for a while now and thought it was time to discuss domains and Startups as I think this will be an increasingly hot topic. The first thing to understand, which shouldn’t come as much of a surprise is that Domainers and Startup Companies view domain names differently. Now I’m not saying they completely disagree on the topic of domains, both sides see value, there’s just a different view on where that value lies.

Let’s talk about Domainers first. I think that as Domainers most of us feel that to own your brand online you need to have the .COM. This doesn’t mean you can’t build a brand on a .NET or a .ORG, many successful brands have been build on these TLDs. However, if you look at successful companies, while they may start on another TLD, they eventually buy the .COM. A good example here is Fiverr.com, a company that started on the brand Fiverr.com and then bought Fiver.com in April of this year for $70,000.

I think most Startups agree that having a great .COM would be ideal…but most also know that their brand name .COM (or the exact match of the niche they’re targeting) is probably taken and out of their price range. Many Startups are so busy building their product, reaching out to investors, hiring new team-members, that they don’t have time to email domain owners to see if a name’s for sale and then go through the negotiation process. In many cases, when getting started they want to quickest path and opt for registering names often in other TLDs. I’ve seen TLDs like .IO used by Startups that still want to have their keywords and don’t care as much about the TLD.

Now I think there is a middle ground. In talking with Startups at a few conferences and events this year it seems like there is an interest in names between $2,500 – $25,000. The problem is, in so many cases Startups that do email someone about a name end-up emailing someone who wants six-figures for their name. The experience may turn them away from making offers on domains or assume that names they would want are out of their price range. It’s not that there’s a problem with Domainers, there’s no reason you should sell a name that’s worth six-figures for less than it’s worth. For Startups there has to be an understanding of Domain Name Value, how much a domain name is really worth, fair market value.

Of course this is where the major challenge comes in. The value of a domain name really depends on the buyer and how much it’s worth to them. Since domain owners know this, if they have a truly phenomenal domains, they’ll wait until the right buyer comes along. At the same time Startup companies should do some research on how much domains cost and pick a great domain that is in their price range. If they have a budget of $15,000 for a domain and their top-choice is taken it doesn’t mean hand-registering a name is the next best choice. It may just mean finding a name that is in your price range and still allows you to get the incredible value of having a good domain name for your business.

Here’s the problem that I see. Right now Startups and Domainers don’t connect at all, yet they both have so much synergy. Startups looking for great domain names don’t attend domain name conferences. Domainers that have great brandable domains don’t attend Startup Conferences. There has to be a way to help connect the two worlds. Sure Startups interact with Domainers through domain marketplaces but in many cases they never get to know each other, it’s a very cold and impersonal process.

These are still the early days of the Domain Industry. I think we’ll find over the years that our connection with real end users, with businesses looking for good domains for their brands, will help to grow our space. Right now we spend a lot of time with each other when the customer is out there, creating great things and looking for a great domain for their brand.

My point here is simple – the Domain Industry is almost completely unknown to Startups, heck to most people! It is our job to spread the word and let people know about the space. Let them know that we’re not just a group of Trademark and Typo-Squatters, that many of us own great brands, strong domains that could be instrumental in a Startup branding it’s business. The opportunity is huge for both Domainers and Startups, let’s connect the dots and work together!

{ 5 comments… add one }

  • RH September 26, 2011, 12:22 pm

    I think the question is, Do startups really look for great domains ? A lot of start ups are built on names that are from great. They are unique, and often made up. I think startups are just not looking to spend what domainers are looking for price wise, when it comes to a great domain.

    Five letter and six letter domains that are made up have value imo, the key is to find a decent pricing formula.

    Again IMO

    Reply
  • Leonard Britt September 26, 2011, 3:48 pm

    We need to realize that oftentimes the world outside of domaining places very little value on domains. It is only when small businesses, developers and bloggers are looking for a domain for a website do they begin to somewhat realize the value. But then they just generally complain because the “domain squatters” have taken all the good ones. This past week I was PMing some followers on Twitter and PMed a developer/designer with a few domans which fit his business. He asked for prices on all three. I responded with prices which I believe are reasonable for an end user (sub-$1000) but even after offering leasing, no interest….

    Reply
  • Sport forum September 27, 2011, 2:39 am

    It’s a very hard thing to convince a ‘non believer’ about domaining and then hope not to be accused of Cyber squating ……… sure education is the key but where does it start when some folk dont want to hear ?

    It’s a unique dilemma no doubt

    Reply
  • Mars Davis September 27, 2011, 10:04 am

    Great topic Morgan!

    I believe that every commercial, home & condo builder needs a great realtor to be constantly prospecting for fantastic real estate locations.

    Similarly, I believe that every entrepreneur, startup, and business owner should have a great domain broker constantly prospecting for fantastic domain names!

    Building a team with specific skill sets… is always better than one individual that is jack-of-all & master-of-none!

    Reply
  • Adam Strong September 27, 2011, 1:00 pm

    Morgan.
    I may be working with more seasoned entrepreneurs , but I don’t think the startup world is unaware of domainers. On the contrary I have found that they all become very aware (and curse us) at the early stage of picking a domain 🙂 What they may not be aware of is their options and why a domain may be parked (“not in use” in their eyes). The entrepreneurial side I’ve dealt with sometimes is unaware that domains can be purchased on lease or purchased for cash plus equity. They are also unaware of values and reasons a name may be priced higher. Here’s an article on the topic : http://foundersblock.com/articles/the-founders-guide-to-buying-domains/

    I’ve been dealing with startups a lot recently and most I’ve dealt with have a budget capping out at around $50k (maybe due in part to Fred Wilson’s post on this subject http://www.avc.com/a_vc/2011/04/finding-and-buying-a-domain-name.html). I’ve been helping them find domains, come up with alternative names, and if need be brokering a deal. Lately it’s been more about finding a good name rather than brokering the deal. As a long-time investor in domains who is familiar with the marketplace, finding good domains for a client is something that comes much easier but finding a creative solution to their specific needs takes some “art”. It’s actually less about brokering and more about naming (within budget).

    I have seen this situation many times where entrepreneurs fall in love with those “still available” gems on the market (you know those 100k+ domains) and they realize that all they can afford is a rock rather than the gem. . . .they are put in a situation where they have to find a good enough one that they can shine up to sparkle like a gem, and those are still very difficult to find. . . . you still have hurdles to overcome even after finding that good name within budget (Kevin Rose talked about this recently in a video post) You have twitter handles, app names, trademark searches to name just a few more obstacles that might stymie your creativity.

    I’m happy to help people through the obstacles or as you said “connect the dots” and help out though. To date, helping people with naming is definitely one of my favorite things to do.

    Reply

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