How to Get the Right Domain Name for Your Startup

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If you’re building a product, it doesn’t matter in the beginning what your name is. If the product is good it can be called purple cow and people will use it.

But, if you’re trying to scale the company, the name matters a lot.

If you have a US startup called X and you don’t have x.com, you should probably change your name.
Paul Graham

What Makes a Good Domain

Matches Your Brand

If your startup is named Lifestyle Guru, then the optimal domain name is the exact match .com domain LifestyleGuru.com. Using anything else is risky because it will confuse customers and drive up marketing costs.

Can you start with LifestyleGuruApp.com or MyLifestyleGuru.com? Sure you can .Depending on the stage of your startup, the cost of the exact match domain and your available capital, it might even be advisable. Just be prepared to accept the fact that the exact match domain gets more expensive the more successful you become.

Example: Buffer started out with bfffr.com in 2010, then upgraded soon to BufferApp.com. Once well established, and after one and half years of negotiation, they forked over more than half a million to buy Buffer.com.

Short

Good domain names are short.

One-word domains are the gold standard, two-word domains are good, three-word domains are average, and above that it is usually a bad idea.

For example, investing.com is a superb domain and sold for $2.45 million. AngelInvesting.com is a good domain because it is a commonly known combination of two words (and it sold for $25,000). AngelInvestingAcademy.com is an average domain and could be used for a website, but has little value in the domain aftermarket.

Example: Luxe Valet, a parking service, shortened their brand to Luxe.com for $172,000.
Example: Fred Wilson paid $60k for avc.com.
Example: StockTradingToGo.com upgraded to StockTrader.com for a “serious investment.” In their words: “StockTradingToGo was a great domain and brand, however it had its weaknesses. First, it is four words which makes it hard to remember. Second, along the same lines as the first, total characters is 16 which is a bit long. Third and most importantly, our parent company Reink Media Group loves premium brandable domains, already owning StockBrokers.com, Ticker.tv, and InvestingTeacher.com. Even with the high cost, there was simply no way we could pass up the opportunity to upgrade StockTradingToGo to such a terrific name.”
Example: TheFreshDiet.com shortened their domain to FreshDiet.com for $75,000. They had a chance to get the domain a couple years earlier for $20,000 but passed then because they didn’t have the money.

Memorable

Just like with your brand, a domain should be simple and easy to remember. If your name consists of two unrelated words, it is often easy to confuse the order (an example would be BrightSlice.com – or is it SliceBright.com?).

Pronounceable and Easily Spelled

Does the domain pass the radio test? If you have to say “that’s spelled with an x instead of z”, you fail the test.

  • Avoid numbers – is it 12steps.org or TwelveSteps.org?
  • Avoid similar sounds – is it YouTube.com or uTube.com?
  • Avoid unusual foreign words and uncommon punctuation – is it AbercrombieAndFitch.com, AbercrombieFitch.com, and how many people do you think will spell Abercrombie right?

If your domain is prone to confusion like this, you are only safe if you manage to get all variation of the domain.

Example: After a short-lived rebranding to “O.co,” Overstock.com changed its brand back to Overstock.com. They reported that  “a good portion” of TV spot viewers went to O.com instead of O.co.

.Com

The .com is the most established top-level domain. A solid .com domain implies credibility. This gives any startup an advantage versus another using a non-.com domain.

The problem with not having the .com of your name is that it signals weakness. Unless you’re so big that your reputation precedes you, a marginal domain suggests you’re a marginal company.
Paul Graham

Can’t I just get the .net or .info?

Yes, you can. At some point though you may want to get the gold-standard .com version, and the problem is that it’s going to be more expensive the better known you are.

Example: Box.net became Box.com for almost $1 million.

But I’m operating in Germany. Is a .de not enough?

Do you want to restrict yourself to a country? If your startup has global ambitions, get a .com right from the start.

Example: Musix.com (€7,750) was acquired by a Swiss music store that used Musix.ch before.

But all the cool kids have an .io, .co, or .ly domain now.
These extensions are in fact country codes, even if they are used for general business. .Co is for Colombia, .ly for Libya, .io for British Indian Ocean Territory. Do you know the regulatory framework these countries apply to their domains? What happens if the government there suddenly decides to restrict its domains to inhabitants of the country? What happens if the country ends up on a embargo and US companies are no longer allowed to do business with it? Are there any special laws or regulations that apply to these domains? Is there a SEO impact?

Vb.ly, a link shortener similar to Bit.ly, was suddenly shut down after it was declared that the content of the site was “against Sharia law”.

Example: Bit.ly decided it didn’t want to build a business atop a domain that could be taken away at any time, with the company’s only recourse to seek redress in the Libyan court system. It acquired Bitly.com in 2011.

What about new gTLDs like .guru? They will replace .com, right?
Yes, they might – in time. It takes a long time to change perception. Right now, there are two problems with using a new gTLD for a startup:

  1. You will lose a percentage of your potential visitors. This is more an effect once you start offline media advertising.
  2. For email, new gTLDs pose a bunch of problems. Sometimes, they are not recognized in web forms and email programs, so people may have problems getting in touch with you via email. For outbound email, non-standard domain extensions are often associated with spam, and get filtered. For example, because .biz and .info domains were are to get, they are often used for mass emails, and spam filters routinely filter out messages containing links to domains in these extensions.

If you are running a startup, you have enough problems, and personally I wouldn’t want to add the domain extension to the list.

I have an app! I don’t need a domain.
Mobile-first is nice and dandy, but at some point you will want a web presence. If your app is successful, the .com will be extensive.

Contains No Dashes

For English domains, dashes (“-“) are not common and should be avoided.

Example: San Francisco media relations firm EZ-PR.com probably didn’t realize when they registered their domain years ago that they were paying $14.5k for the hyphen – they bought EzPr.com for $14,500 in 2015.

Not Funny or Trendy

Your trendy domain name might sound cool today, but chances are it won’t sound so great in a few years. At some point in time, it was cool to leave the last vowel off. Flickr? Then they bought flicker.com, finally.

Legal

Of course, don’t chose a domain that is too similar to competing domain names and make sure not to violate someone else’s trademark.

Taken, But on The Market

All half-decent domains are registered already. That doesn’t mean you can’t buy them. In 99.9% of cases, the owner is willing to let a domain go for the right offer. And sometimes, the price of even a good domain is cheaper than what you would think. On the Sedo domain market place, the average price of .com sales is less than $3,000.

How to check if the domain is for sale?

  • Check the WhoIs record through a site like DomainTools.com, like this. If the domain is listed in a domain marketplace, it may have a For Sale banner displayed on DomainTools.com. This can lead to a fixed price sales page or to a Make Offer listing.
  • If there is no For Sale banner displayed, go to the domain. Is it parked (meaning there are only ads or a placeholder page displayed)? If yes, it’s likely for sale.
  • Is the owner associated with many domains, as per DomainTools? If yes, there is a better chance that the domain is for sale.

1) Find the Owner

Try to find the owner of the domain and contact her or him directly. If the domain is listed on a market place such as Sedo, a 15-20% commission goes to the market places. By going direct, you can often at least save on that commission.

Some domains are also listed for a premium in one market places versus another. For example, all domains from BuyDomains are also available on Afternic, usually with a 20% premium. By just going to BuyDomains direct, you instantly save 20%.

2) Make an Offer

Owners of good domains get daily emails asking if the domain is for sale. Usually, these are ignored. So if you’ve ever contacted a domain owner after looking them up with a WhoIs search and they didn’t reply, it’s not because they didn’t get your email . It’s because they think you’re like everyone else that thinks they can buy the domain for $100.

To get their attention, send a short email with a specific offer. This offer must be high enough to be taken seriously. How high? Depends on the domain:

  1. Premium domains, like boats.com, don’t bother unless you have a high budget and can make initial offers in the high five or low six figures.
  2. Three letter .coms get lots of offers. Your offer will need to be higher than $10k to even get a response.
  3. Four letter .coms also get a lot of offers. If they are pronounceable or kind of make sense (think rdio.com), go with $5k plus. For random letters, start with $1k.
  4. For decent two-word domains, start with $1k to $2.5k.

The key here is to offer enough to make them know you’re a serious buyer.

Should I Use My Real Name?
Personally, I always make offers using my real name. If you are well known though, or represent a company with decent funding, it may be better to ask someone you trust to submit an offer for you.

Should I Lie About My Plans for the Domain?
Didn’t your mama teach you not to lie? Seriously though, if you claim you are a student and you want to acquire a domain for personal use and then the domain ends up with a VC-funded startup, you are risking litigation.

Here’s what I propose: Treat the domain owner like a business partner. The guys over at Buffer went so far as to show their balance sheet to the owner of Buffer.com. Maybe you don’t to be that transparent. You may opt not to share all details, but you certainly shouldn’t make false statements.

3) Agree on a Price

There are at least four more options than just to buy a domain for cash. Here they are ordered by complexity with the easiest first:

  • Rent/lease – you can agree on a long term rent for the name. If you do that, you should also agree on a purchase option.
  • Owner financing – the owner allows the buyer to pay the purchase price over monthly installments.
  • Shares instead of cash – you may be able to trade some equity in your company for the domain.
  • Other creative arrangements to avoid a huge upfront payment. For example, the owner of the Bitcoin.com domain leased it to a company for a share in generated advertising revenue, with a monthly minimum  payment of $10,000.

As a startup owner, you should be creative with how you spend your cash. Why not propose a payment plan instead of full payment?

Zalmi Duchman, who shortened his domain TheFreshDiet.com to FreshDiet.com, shares his experience:

[the] best he [the domain owner] could do was $75,000. That number was closer to my reality, but it was still a check I would have a tough time writing. Out of desperation I asked: can I make payments? The answer: of course, most of our deals are rentals with the option to buy. As I began to get excited about finally owning the domain, I realized the huge mistake I had made years back. Had I inquired about making payments when the asking price was $20,000, I could have had the domain for a few hundred dollars a month, a sum I would have gladly paid. Instead, I paid over $50,000 more for the same domain.

In practice, domain owners often prefer cash payments. They are generally concerned with how the buyer uses the domain while they make monthly payments. The buyer can do a number of things to devalue the domain including unauthorized use of trademark or copyright material, using the domain for any illegal purpose, using the domain for spam, or doing black-hat SEO.

4) Transfer the Domain

Domains of significant value are usually purchased and transferred through an escrow agent.

  • Buyer and seller agree on a price and on an escrow transaction.
  • Buyer transfers funds to escrow.
  • Seller transfers the domain to escrow.
  • Escrow confirms, and funds and domain are released.

The most popular escrow providers are Escrow.com (0.89% fee), Sedo (3% fee) and Dn.com (0.8% fee).

When Should You Buy a Domain on the Aftermarket

Your Stage Do This
Pre-Seed/Prototype/Mobile-First Go with any temporary domain or a new gTLD; don’t bother spending money on a premium domain or buy it for potential resale.
Seed Buy the exact match .com only if available for less than $1,000 or as an investment if you have spare capital
Product market fit/VC Buy the exact match .com if available for less than 5% of your funding.
If not available at that price, try to negotiate a lease with option to buy.
Expansion Buy the exact match .com and variations, buy ccTlds.
Facebook Buy the two letter .com as abbreviation ($8.5m).
Google Do the opposite and rebrand to abc.xyz.
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