advice Well funded startup wants my domain

[Mojoman1234]

I was contacted by a principle from a well funded startup (>$12M), still in stealth mode and about to move into 25k square feet of prime commercial office space. The founders sold their previous company for billions. Let's call the new company "ABC Technology". I own "ABCtech.com". The real name is three characters + technology. (the three characters have industry significance) I used this briefly for tech blog, now just linked to a dormant twitter account.

Their initial offer was $500, "we're just a startup". I countered with: for that amount I'll just hold onto it and maybe use it with my next company, or offer it to "ABC Technology Consultants" who have also expressed interest. I also let him know that I am aware of their financial situation.

He is now asking if there is a price level I am thinking of.

I'd greatly appreciate your advice! What would you do?

 

[Joseph Green]

This scenario is the jackpot of domaining. Almost all of my large domain sales ($85,000+) have come from this situation.

It's a little late, but you shouldn't have mentioned that you're aware of their financial situation. That causes them to put up their guard, and it's not relevant to the discussion anyway. If it's public information, they will assume you know. To mention it gives the impression that you're charging them more as a result of it, and no one likes that.

The rest is simple. Quote 1% of their most recent funding round and settle at no less than 0.5% of it. If they raised $30 million Series B, then quote $300,000 and accept no less than $150,000 if you feel generous.

Most often, I'll quote 1% and refuse to budge. In my experience, it may take 8+ months, but they'll pay it.

 

[biggie]

telling potentials that you know about their financials is NOT the way to negotiate

because their net worth, may be irrelevant to any budgeted amount for that name.

if you know, then keep it to yourself and negotiate based on that knowledge if you must.


as for how much to ask for, do research on how many alternative names they could select

whois the other extensions registered, if any, and see if they own those as well.

only you know the domain, so only you can set price.

imo....

 

[NameFu]

I'd wait a 3 - 4 days to give them the impression that you're no longer interested, which if they are really thirsty for your name will worry them a little bit. This also tells them that you're not desperate.

Then you can use these tactics. From what I got from Adam Dicker's Domain Sherpa interview, he uses similar tactics as below:

"Thanks, but I'm looking for more serious offers. If you can meet me some where in the mid $xx,xxx ball park we may have a deal"

If his replied offer is still not high enough, you can then say something like "Thanks, but I'm afraid $xx,xxx isn't enough. I'm not asking for $100k, but if you can meet me somewhere in the middle we've got a deal."

Legal: Use this at your own risk...I don't take responsibility for anyone else's failed negotiations. I'm just sharing some ideas

 

[venturefile.com]

If you don't ask for a lot of money, then you won't get a lot of money.. Simple.

 

[jamesau]

Given the potential buyer already has their full company name as a domain, this is not a critical acquisition for them. They can succeed without the domain and any negotiations will reflect that. Unfortunately it's not quite the same as juicy scenarios like Buffer where they are completely cornered and essentially have to pay whatever the owner wants.

You can ask 5 figures but be prepared to walk away. If you would regret not selling for $5000 then keep that in mind and don't get too excited by the numbers being thrown around in the thread.

Here's the relevant Namebio data for the last 18+ months:

xiatech.com    209 USD    2015-07-11    DropCatch
zumtech.com    121 USD    2015-07-03    GoDaddy
avotech.com    239 USD    2015-05-30    NameJet
zontech.com    1,019 USD    2015-05-22    Sedo
vamtech.com    4,319 USD    2015-05-14    Sedo
mystech.com    1,500 USD    2015-05-11    BuyDomains
nictech.com    390 USD    2015-04-01    NameJet
epitech.com    2,988 USD    2015-03-21    NameJet
voytech.com    205 USD    2015-02-24    GoDaddy
certech.com    4,550 USD    2015-02-08    DomainNameSales
powtech.com    1,100 USD    2014-11-14    NameJet
usetech.com    721 USD    2014-08-28    NameJet
rentech.com    1,250 USD    2014-05-27    GoDaddy
abctech.com    1,922 USD    2014-04-01    NameJet
reutech.com    3,500 USD    2014-03-12    Sedo
bittech.com    950 USD    2014-01-19    NameJet

Bear in mind these are not all end user sales (so your value may be higher), but you can at least see public perceived value for these names. This same data is going to be researched by any sensible buyer.

Make sure you check to see if there is any sales data on the domains the startup owns so far. It may seem obvious but you can sometimes get lucky and find data out there to show that a company has spent $X to buy a domain or even multiple domains. Once you then know they have spent $X to buy a domain before you can feel comfortable submitting a valuation in that ballpark.

Even if you can find data from some of their peer companies that could be helpful. Try to find info on their industry friends and funders; you can be sure they are going to ask the advice of someone who has been through this process before.

 

[Nick]

$1 for every square foot of office space they have.

or

Something creative. Example: $X + X% share in their company (if you believe in it)

 

[Nick]

I highly doubt they'd rather print up business cards that say "ABCtechnology.com" as opposed to "ABCtech.com". With that being said, I'm sure they'd prefer "ABC.com" to yours, as well. So, take into consideration what the LLL version is worth, and if it's obtainable, before shooting yourself in the foot. (I was halfway joking about the $1/square foot)

Also, take into consideration what funding round they're in and at what valuation.

 

[imc]

Tell them, the company name is an independent asset which can add value when the company is sold/acquired or merged with another and thus can get multiples as an asset sale. I use this argument and it has helped me get near price points to my bigger sales.

 

[DomainVP]

You should always keep the interaction between you and the prospective buyer conversational and light, it's a business transaction and not a battle. You are part of the transaction; if you are disrespectful or snarky the buyer may just not buy the domain to make a point. Do research on the Nets.com domain, and you will learn quickly that being a jerk is not the way to go with domain sales.

When you are contacted with an inquiry, do your research on the person (if you can). Search for their company, search for their eMail address, learn about their business.

If it is a 'ghost' or anonymous eMail address that shows no history, then treat them as if they are the most knowledgable person in the industry; they just might be.

Once they make contact invite them to make an offer, and once the offer is made negotiate up; never give a price or discuss that the domain is 'for sale' until an offer is made.

*this will protect you from a URDP action in the future. Once an offer is made over the cost of registration and renewals, the party concedes that you are a rightful owner. Be leery of extremely low offers with that justification; they want your name, and are positioning themselves to keep the door open for potential UDRP action.

If you don't come to an agreed upon price, then you move along; they may come back and pay your price or they may never contact you again.

The price is set by you...

If you think the domain is worth $100k then so be it, either they pay it or they don't. If you are looking to make a sale then stick to reasonable prices in the $5k - $20k range.

That's all there is to it... nothing else matters.

 

[wayne wooldridge]

Yep, if they feel like they can get it at a steal, that's exactly what they are going to do. $500 as an initial offer tells me they are hoping you are a novice to domaining and will jump at that price. It's a lowball number for them, but just enough to a regular Joe to sound like it's his lucky day.

It's like when you hook up with a new chick at a bar. If you call her the very next day sounding like you're desperate, she will lose interest very quickly, and the less chance you have at scoring. But, if you let her mind wander, she will be the one waiting for you to call and will be more willing to give you what you want.
You have to lead and be in charge of the situation.

 

[The New Guy]

telling potentials that you know about their financials is NOT the way to negotiate

They used the "We're just a startup" line to plead poverty and get the domain name cheaply. The OP responded appropriately in this case because it removed their ability to falsely claim they don't have the resources.

 

[SpareDomains]

Hard to guess exactly without knowing the domain/company. I'm a passive, patient, end user only seller. I look at a domain and value it based on the right end user buying it. I usually have info on buyers name, email, ip, phone as I use my own sales pages but even when they come anonymous sedo, etc... I won't really have any regret if they don't buy as the domain has already been valued by me for an end user only sale and not so much on who the buyer is as I only sell to the right end user so I shoot my price. If they pass no biggie they weren't the right buyer.

So hard to tell someone else what to do as financial situations are different, maybe domainer A doesn't need the money where domainer B needs to feed 5 kids. I can blow a sale and not give it a second thought as I don't look at the buyer and go he's broke let me lower my price or he's rich let me triple it. My advice would be to formulate ballpark ranges on all of your domains so when offers approach your not so much looking at who the buyer is but sticking to your previous research of domain value based on domain quality, end user value, ROI potential, offer frequency, amount of possible end users etc...

I've got one now that I bought quite a while ago for $8 and I declined him at 10k as it's worth slightly more and it gets a few offers every month.

I've got another one right now that came in at 500 declined, then 1000 declined and now 9 months later as they won't go away were at 4000 but doubt I'll sell for less than 7500-10000 as once again worth more. This one tried to be sneaky and anonymous but I've connected all the pieces, on their second round of funding along with their site being in beta mode, just not sharing with them that I know who they are. Nothing more than a gonna have to pass but thanks for the offer.

So guess my point is who the end user is can swing pricing but just because someones rich doesn't mean they will pay 3x the value of the domain. And just because someones broke doesn't mean ya let a gem go for pennies. Also clues you'll pick up on, how fast do they respond=urgency, along with saving/analyzing all emails as sometimes ya can read between the lines or things that were said in email #1 change in email #3 without them realizing it along with googling everything names, phones, emails, company names etc...

So without knowing the domain/buyer hard to say where I would shoot but guessing it would definitely be 4-5 figure range. But your formulation should be domain quality research, end user research along with your current financial position. Always be nice so if ya do shoot for the sky above their heads possibility to recoup it at a lower figure. The take it or leave it usually doesn't go far in continued negotiations.

 

[Vinod R]

Renew it for the next 5 years and move on they will come. When you renew for 5-10 years they will know that you will not drop the name for 5-10 years and there is no need to wait for you to drop it, so they know that they will have to offer a price for the name. Let them come again, wait (Its hard, but it would be worth).

 

[Kachi]

Start from $50k.

I have a call scheduled with the decision maker tomorrow. I'll update afterwards.

 

[Joseph Green]

is there any chance of buyer seeing this thread??

Highly unlikely. Even if they did, it wouldn't change anything. The price is the price. They can either pay it or not, and my money is on them paying it.

Quote 1% of their most recent funding round and settle at no less than 0.5% of it. If they raised $30 million Series B, then quote $300,000 and accept no less than $150,000 if you feel generous.

I should add that if you aren't happy with the price that results from 1% of their latest funding round, then your best bet is to wait until they raise another round of funding, become profitable, or they go public. If you don't think any of those are likely, then you might want to sell for less while you still can.

 

[cocaseco]

#1 rule in sales....Time kills all deals. Always has, always will.

 

[Kate]

My thoughts:

• Just because the startup is "well-funded" doesn't mean they will spend a lot on a domain name. Their allocated budget is probably below your expectations
• This is especially true when they don't have a critical need for the domain... They already have one.
  
• One thing to ponder: the first offer you receive will often be the last. Keep this in mind, especially when you have a potential buyer in front of you, who appears to be the best end user for the domain. Or when you have a domain that doesn't have a lot of 'obvious' end users.
• Obviously we all want to get the best price for our domains, but the other party must not feel like we are taking unfair advantage of them. We have to be tactful.
  
• On the other hand the OP says he has been using the domain. He's a not a professional domain seller. He just happens to own a domain that somebody else is interested in. So it's perfectly fine to answer that $500 is not worth the inconvenience even if the name is average. I declined a similar offer once, because I would have to migrate a number of E-mail addresses etc so it was not really worth the hassle.

At this point the negotiation may already be over. It happens all the time.

To sum up: I think you should stick to your guns when you have domains you know are good, that could appeal to many possible end users. When average domain names are involved, offers will be scarce and they must be treated more like once-only opportunities.
If you don't need the money, then no regrets.

 

[NPer]

" ABCTech" would be a great trading name for ABCTechnology don't you agree?

Finally we know who the potential buyer was.

Turns out, it was Google... now using: ABC.XYZ

:D

 

[pchip]

I bet you that that after you tell them about your knowledge they will feel uncomfortable making offers of $500.
It's pure psychology.

Call it what you will, business transparency and/or psychology. Telling a client that you're aware of their financials during negotiations is unprofessional and not the best way to play your hand to get the best deal.

Being honest, that has to be one of the most ridiculous business negotiation tactics that I've heard of. You're basically saying that I know you have a bunch of money so therefore this name is worth more because you want it. You can think that but you don't tell people that. I would walk away from the deal in a heartbeat if someone responded to me with that.

Regardless of the outcome, I still think it's very unprofessional.

There are far better ways of negotiating and not coming across like a sleazy/shady car salesman (no offense if anyone here sells cars).

 

[NPer]

How about next time you go to the grocery store, the cashier says:
"That loaf of bread will cost you $10, sir... we know you can afford it judging by the prices you charge for your domain names".

And the next time a broke domainer "high-balls" you on a domain, insist that he pays less, because you know of his financial status.

Would you do these things?

One would think that items/property had a fair value-which would apply to everybody if sold to them.

If I feel like I am being ripped off, despite my financial status, I'll walk away. On the other hand, if I feel like I am getting a bargain, I might just buy it. It's how you approach the situation. I'd rather have the customer feel good about the purchase, and send me some good energy with the money.

Out of curiosity: is "ABC"T.com or "A"Tech.com in use or on sale? Are there any other generic names which would suit their business, that is available for a similar(or lower) price that you intend to charge? Plenty of companies use domains that differ from their actual business name... they refer to this as their "trading name".

I do hope that you make the sale though.

 

[wayne wooldridge]

Usually the "sit back and wait" tactic comes after making a rebuttal with your counter-offer. It's just good business practise to reply within a reasonable amount of time when asked a direct question.

Obviously, they are interested, enough to take a nibble at the bait. If you don't reel him in, he's gonna find other bait and swim away...

 

[Mojoman1234]

Update: After not hearing back for two weeks, and digesting the wide range of advice here, I emailed him on Friday. Replying to his message "what range are you thinking of?" I replied "something in the $10k range". Thinking that may at least get a conversation started over $500 level. The quick response was "No thanks".

Oh well! I'll continue to use it and as they officially launch the company, they may rethink the value down the road. I'm still good with my $8 investment and my entertaining foray into your domain trading world. Thanks for the insights!

 

[Mojoman1234]

$1k is their max. Maybe it needs another 3 yrs of me collecting daily emails intended for them, or maybe when they take it public.

 

[Lite]

I would ask for $15K and will accept offer close to $10K