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?

 

[Mojoman1234]

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.


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.

It's very early for them. First round funding in place, preparing to move into a space, not even firm details on the product, but all indications are it will be a spin of their last venture which sold for $Bs. I'd be OK with 1%!

 

[imc]

It's very early for them. First round funding in place, preparing to move into a space, not even firm details on the product, but all indications are it will be a spin of their last venture which sold for $Bs. I'd be OK with 1%!

Never think for a moment they don't have an alternative. They do. You getting the best price depends on your communication skills, pricing and the eagerness test. If they smell you are eager, they will bring it down.

 

[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.

 

[NameFit]

Looking at the balance sheet of a potential buyer and thinking that they are 'trapped' has its pros and cons. It may result in huge payoff or it may just results into nothing. I have taken those risks but in general had not been fruitful. I know many well known domainers take those risks and there are often headlines about such sales in forums, blogs, newsletters or what not.

Have this thought come to your mind that you could be treading into the UDRP case territory. A name that is not generic (if you say it is three letters), you probably have nothing to do with that technology (except a blog as you mentioned), Similar sounding name ('tech' and 'technology'). If they are a startup with so much financing, they probably have TM'ed their assets.

I would look at the inherent value, hence market value of the name as well. Besides the current buyer - how many potential buyers you have. I have had names which I thought nobody would buy (I do have records of all the inquiries I have received over 15+ years of domaining). I have accepted a reasonable offer on such names (anything above $500) if such offer came along.

 

[Mojoman1234]

Have this thought come to your mind that you could be treading into the UDRP case territory. A name that is not generic (if you say it is three letters), you probably have nothing to do with that technology (except a blog as you mentioned), Similar sounding name ('tech' and 'technology'). If they are a startup with so much financing, they probably have TM'ed their assets.

The three characters do have big significance to the region and many technology businesses in the region. I am in tech myself, which is why I chose the name in the first place, have used it in the past and may very well use it in the future. This offer came out of the blue, although this scenario did cross my mind as a possibility when I read of this new firm with the very similar, but not as catchy name.

RE: UDRP. I registered and began using the domain three years ago. This new firm incorporated late last year. Wouldn't that work in my favor?

I don't think they are "trapped". I know they want the domain, and I'm prepared to sit tight with it unless I get a significant price for it. As I told them, for $500, I'll just keep it for my own future use or open it up to other potential buyers. That was my last communication to them. I haven't responded to their question of "is there a price level you're thinking of".

I don't "need" to sell it, but it could be a nice windfall.

 

[NameFit]

As I told them, for $500, I'll just keep it for my own future use or open it up to other potential buyers. That was my last communication to them. I haven't responded to their question of "is there a price level you're thinking of".

That is very good approach - want to sell but not keen, and do not mind keeping it. Basically you told them that market value 'to you' personally is more than $500, hence moving them up a notch.

It would be interesting to see how things turn up in this scenario.

 

[Paully]

I don't generally like the concept of pricing things based on how much somebody looks like they can afford but a good sales opportunity like this doesn't come around every day so I understand why people do it.

I agree with those saying that you shouldn't tell somebody you are negotiating with that you know how much they can afford, but in this case it probably was justified as they were claiming to be a humble start up.

Gotta say though this happens often and what amazes me is that

(A) People name their startups before locking down the domain name.
(B) Others give them money without asking if they have secured an appropriate domain name.

It's not like they are not tech people !

 

[imc]

I don't generally like the concept of pricing things based on how much somebody looks like they can afford but a good sales opportunity like this doesn't come around every day so I understand why people do it.

I think you are wrong there. Your claim tries to ascertain that there is a fixed value with domains.

This article has a lot of irony in it.
http://venturebeat.com/2013/08/21/i...d-to-zuckerberg-but-is-cool-with-the-changes/

 

[Joseph Green]

I don't generally like the concept of pricing things based on how much somebody looks like they can afford but a good sales opportunity like this doesn't come around every day so I understand why people do it.

It's analogous to buying a home in the middle of nowhere and then Universal Studios deciding to build a theme park with hotels, shopping malls, and rides nearby. The value of the home went up.

RE: UDRP. I registered and began using the domain three years ago. This new firm incorporated late last year. Wouldn't that work in my favor?

As long as you don't put up ads of theirs or their competitors on the domain and you don't get a loony UDRP panel (rarely happens), then you have nothing to worry about.

 

[Paully]

I think you are wrong there. Your claim tries to ascertain that there is a fixed value with domains.

This article has a lot of irony in it.
http://venturebeat.com/2013/08/21/i...d-to-zuckerberg-but-is-cool-with-the-changes/

Wrong? What are you talking about? How can an opinion be wrong? You may not agree with it, but that doesn't make it wrong.

Try reading my post again. It seems to have flown over you I said that "I (meaning me personally) don't generally like the concept of pricing things based on how much somebody looks like they can afford, but a good sales opportunity like this doesn't come around every day so I understand why people do it"

I didn't say anything about domains having fixed values. .I do believe that a domain's value generally falls within a particular range based on factors such as age, length, traffic, demand, or previous sales etc but that range can be very wide, plus of course, other factors such as seller or buyer's motivation and right place right time luck come into it but how much money your potential purchaser has shouldn't (but does).

 

[Paully]

It's analogous to buying a home in the middle of nowhere and then Universal Studios deciding to build a theme park with hotels, shopping malls, and rides nearby. The value of the home went up.

The land the house is on may have increased, but that value still falls within a particular range that should be the same no matter who is buying it. A rich man is more likely to pay over the odds for something he wants, but most rich people (that earned their money) are not stupid and know the value of what they are buying and, what is an acceptable premium to pay.

What the OP has to gauge is what that acceptable premium may be based on what other equally or almost as good alternatives are available

 

[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.

 

[Joseph Green]

A rich man is more likely to pay over the odds for something he wants, but most rich people (that earned their money) are not stupid and know the value of what they are buying and, what is an acceptable premium to pay.

Exactly, and that's why they understand the value of the domain to their business even better than the seller. That causes money to be left on the table.

The "fair market value" means nothing to them if they can earn a multiple of that within a month of using the domain name. They might try to get a fair price, but they aren't going to walk away from a higher price that they can afford. This assumes they are buying the domain for their company website.

 

[imc]

Wrong? What are you talking about? How can an opinion be wrong? You may not agree with it, but that doesn't make it wrong..

Well, my statement was also an 'opinion'.

 

[Mojoman1234]

What the OP has to gauge is what that acceptable premium may be based on what other equally or almost as good alternatives are available

Thanks to all for the continued discussion and feedback!

Just to reiterate: ABC Technology owns ABCTechnology.com
They also already own or not available:
ABCTechnology.net, org, info

I own what I perceive to be the most attractive/marketable alternative: ABCTech.com

 

[DomainGist]

Thanks to all for the continued discussion and feedback!

Just to reiterate: ABC Technology owns ABCTechnology.com
They also already own or not available:
ABCTechnology.net, org, info

I own what I perceive to be the most attractive/marketable alternative: ABCTech.com

What about abc.technology?

Out of interest, how do you know that the company who contacted you is the one which has $12m of funding, if they were in 'stealth mode'?

Seems to be plenty of businesses called ABC technology or ABC tech, of various sizes, could be any of them unless you have good reason to believe that it is the $12m startup?

Assuming that it is that startup, you have to consider the possibility that they are buying up domains as brand protection, rather than because they see your domain as superior to theirs.

But it is worth a hell of a lot more than $500 regardless, considering the number of other potential suitors.

 

[DomainGist]

"ABC.com" is not available, looks like a big Chinese site.

You're kidding, right?

ABC.com leads to the homepage of the American Broadcasting Corporation.

 

[Mojoman1234]

What about abc.technology?

Out of interest, how do you know that the company who contacted you is the one which has $12m of funding, if they were in 'stealth mode'?

Seems to be plenty of businesses called ABC technology or ABC tech, of various sizes, could be any of them unless you have good reason to believe that it is the $12m startup?

Assuming that it is that startup, you have to consider the possibility that they are buying up domains as brand protection, rather than because they see your domain as superior to theirs.

But it is worth a hell of a lot more than $500 regardless, considering the number of other potential suitors.

If it was your company, how would you value ABCtech.com vs. ABC.technology?

Stealth mode refers to specifics on the new company's products being unpublished, no website up, just a few business articles regarding funding for these industry veterans launching a new company soon.

Oh, it's them. The person who contacted me is a known principle of the startup, referred to ABCTechnology and used an @abctechnology.com email address.

I certainly realize they may just be looking to acquire it for brand protection, still valuable though no? Maybe even preferable for email addresses, branding etc? Always the possibility of officially shortening the name at some point, before launch even?

Again, I'm using "ABC" as a place holder for the real 3 characters which have significant regional and industry meaning.

 

[Mojoman1234]

You're kidding, right?

ABC.com leads to the homepage of the American Broadcasting Corporation.

I know the thread is getting long. See my note above about "ABC"

 

[DomainGist]

I certainly realize they may just be looking to acquire it for brand protection, still valuable though no?

Well like I already said....

"But it is worth a hell of a lot more than $500 regardless, considering the number of other potential suitors"

You'd be giving it away at $$$....... whether you'd accept the first low $$$$ bid which comes is dependent on how much you need the money I guess, depends on your personal circumstances.

I suppose you have to weigh up the risk vs reward ratio of asking for a sky high price like one poster above suggested. But as you possess their email address that gives you a big advantage, because if you go too high and their interest cools you can at least wait a while and then get back in touch to resume negotiations at a lower price point.

If they'd made an offer via sedo or godaddy you have to get things right the first time because if they go they may not ever be coming back.

In my opinion having their email address leaves you more scope to play a long game and aim high.

If you are just looking for somebody to tell you that you did the right thing in rejecting $500, then yes you did the right thing. Absolutely. That's obvious.

Me stating a price is pointless really.... you can't value a domain like a car, but I'd probably be wanting a minimum of $2000. Some would say that's very unambitious, I have a thing about that number though, probably because DN Journal use it as their threshold when deciding which sales are worth reporting.

Numbers like $30,000 sound pie in the sky to me...... Pug.com sold for a little more than that this year.

Also worth noting that when a firm raises money in a funding round that capital isn't usually released to them in one lump sum, its usually dripfed over a prolonged period of time, and each installment can even me dependent on them meeting performance targets / objectives.

It doesn't mean that they'll have $12m in the bank, and it isn't necessarily a big amount of money if they have a huge burn rate.

 

[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.

 

[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.

 

[Soofi]

what happened with negotiations on this one?

 

[D Haynes]

what happened with negotiations on this one?

Yeah I'm watching with baited breath. Be good to see how this plays out. If the origional poster wants to post the info that is.