information Why some domain investor partnerships end badly!

It's easier to get a group of people to agree at first, than to have them stay in agreement.

There always someone that wants their money out early. Which is the biggest problem I heard with
domain investor partnerships in the past. Even if everything written up legally, there that guy that never stops bothering you that they need their investment capital back.

Also many of these groups have development as their business model of getting a profit out of the domain. Which leads to too many chefs in the kitchen once it's time to make actual development decisions.

Human greed and lack of patience may be another factor leading to partnership breakups. It is also important to enter into partnership with someone who thoroughly understands the market, to avoid wrong expectations which could lead to breakup faster than anything else.

johname said:

It's easier to get a group of people to agree at first, than to have them stay in agreement.

There always someone that wants their money out early. Which is the biggest problem I heard with
domain investor partnerships in the past. Even if everything written up legally, there that guy that never stops bothering you that they need their investment capital back.

Also many of these groups have development as their business model of getting a profit out of the domain. Which leads to too many chefs in the kitchen once it's time to make actual development decisions.

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Exactly Johname because there are so many variables, just take a great offer, you me and one other human being own a third of a domain name where we each put up $10,000. Now an offer comes in for $120,000, two of us think it's worth $500,000 and want to hold, but one of the three says, "I will take the $30,000 profit." While two of us say no, at a minimum the third wants to be bought out, give me my $40,000 and I don't care what you people do.

If the other two don't have $40,000 to put up there is a problem, then it gets into jurisdiction, the wants of the minority ownership, all kinds of things can come up.

equity78 said:

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Exactly Johname because there are so many variables, just take a great offer, you me and one other human being own a third of a domain name where we each put up $10,000. Now an offer comes in for $120,000, two of us think it's worth $500,000 and want to hold, but one of the three says, "I will take the $30,000 profit." While two of us say no, at a minimum the third wants to be bought out, give me my $40,000 and I don't care what you people do.

If the other two don't have $40,000 to put up there is a problem, then it gets into jurisdiction, the wants of the minority ownership, all kinds of things can come up.

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To mitigate against that, voting powers should be assigned and agreed upon in advance. Whenever debatable matter arises, it should be settled with votes.

dande said:

To mitigate against that, voting powers should be assigned and agreed upon in advance. Whenever debatable matter arises, it should be settled with votes.

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I know plenty of partnerships that had that, in one the guy who was 6'5 told the guy who was 5'6 we are selling or we can rectify this in another way, you won't like the other way. My friend was the third member who decided it was best to sell and part ways. I had suggested arbitration but he felt the other guy was going to flip out and it was best to sell.

The other mistake is sometimes people just go in together but the name is in one person's name, then it becomes you better have done your homework because that person can sell if they want to sell. The name better be a name you could never afford in anyway to go into a partnership, I see people go into partnership on a $2,500 name because they feel like they just want to share the cost with someone, but they could easily afford the $2,500. Much better to own names you can afford by yourself then all the nonsense that comes with a partnership.

If it's wow we can get this LL.com for $80,000 and I can't afford $80,000 ok maybe you got a couple partners and spread out the risk on a domain category that has liquid value and can sell for big money.

Well, maybe it's just better to be alone, free, and independent. However, I am still thinking of a joint venture, run under a registered LLC, with accountant and management.

Believe the overall, general topic of business partnerships and the potential for multi-fawcetted ramifications is an important topic for review and discussion - including of course the intellectual property of those in partnership.

While in years past the potential and, the temptation, for business partnerships re domains and other businesses was presented, I'm convinced I was not suited for such a venture, or such adventure.

Interesting thread. There is a domain I have negotiated the price down to a reasonable xx,xxx but I don't have the liquidity I need to get the name on my own.

I've asked one of the attorneys I deal with on a regular basis to draw up a simple agreement that I can use in the event I can find 2-4 other investors.

He says it would be surprisingly easy to do, just form a LLC for the one domain and structure it to dissolve once it has been sold (of course there is more to it than that) and the funds have been distributed.