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?

 

[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.

 

[DomainGist]

Bear in mind these are not end user sales

What makes you think that? What sort of domainer would invest $4550 in certech.com, or $3500 in reutech.com?

Plenty of end user sales through sedo, considering so many park their domains there with a link to the make offer page? Especially for domains where the owner has privacy enabled, or the end user doesn't know how to do a whois.

 

[djum]

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

Why not? It always good to let them know that you aware, so they don't make $500 offer.
Playing on your strength is good way to negotiate.
You have the name they want and you know who they are, at the same time you not asking for $100 000, but serious offer. Nothing shady, just transparent business.

 

[Mojoman1234]

JRayers: Thanks for the Nambio data and link. There have been no sales on "ABC" domains. My feeling is that they just started looking at acquiring alternatives, and my "ABCtech.com" is top of the list.

RE other xxxtech sales from Nambio. Looking at that list, none of those match the significance of mine. Those all look pretty random with the exception of bit, pow from my perspective as far as "tech" goes.

I'll keep this updated with progress. This all just began last week. I'm still planning on sitting tight and not responding to their last message asking what range I'm thinking of.

Thanks again for all the input.

 

[biggie]

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

Why not? It always good to let them know that you aware, so they don't make $500 offer.
Playing on your strength is good way to negotiate.
You have the name they want and you know who they are, at the same time you not asking for $100 000, but serious offer. Nothing shady, just transparent business.

telling them that you know who they are and that you know about their financial status, will not prevent them from making a $500 offer or a lower one.

it's like capital one asking "whats in your wallet?"

only by not accepting an offer, will they ponder whether or not to increase their bid.

imo....

 

[djum]

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

 

[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).

 

[biggie]

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

your knowledge of my financials wouldn't make me feel uncomfortable with offering you what i think it's worth to me.... because that's the amount i'm comfortable with spending for your name.

now, if you don't take it, then i'll walk.

that's the chance you, the OP"s potential and every other seller faces during a negotiation.

i may want your name, but do i really need it?

imo....

 

[Mojoman1234]

Pchip: I think from your perspective as a pro domain trader, you are correct that it would be inappropriate to mention finances at your level.

Keep in mind that I am a private individual who was contacted directly by this company. I have never tried to sell any of the few domains I happen to own.

It was a very casual, friendly email exchange. When he said "@$500, we're just a startup" I just said " but its not like your starting out in your garage from what I've read. For $500, I'll just hang onto it for my own use... Good luck with the new venture!"

 

[D Haynes]

Pchip: I think from your perspective as a pro domain trader, you are correct that it would be inappropriate to mention finances at your level.

Keep in mind that I am a private individual who was contacted directly by this company. I have never tried to sell any of the few domains I happen to own.

It was a very casual, friendly email exchange. When he said "@$500, we're just a startup" I just said " but its not like your starting out in your garage from what I've read. For $500, I'll just hang onto it for my own use... Good luck with the new venture!"

To be honest I quite like this response. It says you know the domains worth more than $500 to them (hopfully), but your not going to go at them with a massive counter offer that shows them and their knowledge no respect. Its more subtly asking them to make you a better offer if they really want it, but if not your happy to keep it. It's more what your not saying that counts here. Personally I think there are many worse ways you could have replied.

 

[djum]

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).

I can literally feel your anger flying in the air, breath

Business is a fight in civilized way. Negotiation and using right word construction is an art. Following your logic I need to get offended when company with 12+ mln. financing offering me $500 for the name trying to say they just a startup. Isn't that classified as "sleazy/shady car salesman" then? Afterall they using psychological trick, trying to fool me that they are small company and can't afford more? I think so. That's why bigger companies hire brokers and lawyers to lie on their part.

But we don't get offended, because we are serious about the process. And 100% professional. Not trying to bull someone, but rather clear the fog. They say "I'm poor, can only offer $500". You answer "Hmm, but I've seen you just got financed". Exchanging words like jabs in a boxing fight. Smart businessman will never walk away from the deal, just because the other party can't be bullied or fooled.