I'm not sure if this thread is the proper venue for continuing this discussion...
dwrunyon
By start-up do you mean a forum with PPC? Or an aggregator site that squeezes clicks out of visitors? I think our idea of a start-up, particulary in terms of exit value, is quite different. I'm not trying to be insulting; I'm trying to be realistic. Buying a domain name for a few thousand creates a significant sunk cost. There needs to be website development, software licensing, and perhaps most fundamental to these internet start-ups, directed traffic. With all of these up front expenditures, it is unlikely to ever produce an operating margin or even stay afloat. And who is the usual suspect in these "next big thing" entrepreneur forums? Some high school or college kid with credit card debt who can't bear the thought of working 9-5.
A company thinking of buying a generic domain just for the keywords would be hard pressed to pass a cost-benefit analysis. A semigeneric domain that does not get tens of thousands of type-ins would not have an acceptable ROI. The beauty of a start-up is that you can expand your brand as you grow, spending a few thousand on memorable logo design and marketing/PR efforts is a much better option. Then there is the slippery slope aspect, look at your "cheapshoes.com" example, should cheapshoes.net also be purchased? Typos? It's better to just build a brand and thus have intellectual property rights over domains that use your name. The purchase of semi-generics actually dilutes your identity unless ALL variations are within your control.
These "starry eyed" and "gut playing" entrepreneurs, might as well be called "marks" by you. What you are advising is that someone troll forums, engage in conversations with alterior motives, and then present themself as an "expert" to a novice. What if they ask you for your credentials, it is ok to tell them you have a Wharton MBA and have made millions in the domain afternmarket? Give them a madeup value formula based on google and overture results?
As for your grocer example, I don't think it could be anymore wrong. First of all, items in a grocercy are fungible. Domain are unique which is what makes valuation so difficult. So these valuations you speak of are based on, what? Traffic can be used, but if you don't have that you are selecting an arbitrary number and presenting it as definite. Also, there is no way you can actually offer constructive advice, because you have a vested interest in justifying the high price so you will either never see or disclose the flaws in the business potential of the domain.
"Uhhhhh....? The web RULES business these days...if they dont have a site, they are not of my concern!"
Well, your concern really doesn't matter to a real start-up, unless you are a venture capitalist or see aquisition potential. In many cases a start-up will not need a website because it has a proprietary intellectual property portfolio that it needs to protect, there is no need to have a website if your primary asset is IP that cannot be disclosed! Again, I think that this contention hinges on our respective definition of "start-up".
It is my personal opinion that sales should not be pushed in such an opportunistic manner. End users should seek out domains when they are prepared, not have them pushed upon them along with a pipe dream.
almarti2
