“In the physical world, we know that real estate is considered a primary asset for people and businesses. As virtual goods (which notably includes both content and cryptocurrency, by the way) continue to gain and hold real value, it's vital to consider your digital property among your assets, including domain names.” Sam Romain
A premium domain name is an investment in your brand - it offers exclusivity to build a stellar online identity. Although sourcing enough money to acquire a premium domain name can be difficult, there are many options that startups can consider. One of them is offering equity as part of a domain name deal. In fact, some of the most recognized global brands have considered equity in exchange for getting their perfect domain name.
Did you know that Marc Zuckerberg launched Facebook under the name "TheFacebook"? Zuckerberg wanted to call his social network Facebook from the start, but the domain name wasn't available, so he simply added the word "The" to it and got to work. Mark had registered the domain name TheFacebook.com on January 11, 2004.
In 2005, the number of people becoming members of the
platform grew. Sean Parker, an entrepreneur and founder of Napster who was
fascinated with TheFacebook (as a service, not as a domain name), suggested dropping the infamous „the". Facebook offered equity in the company to the
owner of the domain Facebook.com. He refused and demanded $200,000 (42.5 times
less than what Facebook spent to acquire fb.com for $8.5 million), so Facebook
paid and the site name has changed along with the domain. Would he have made
the same choice today? Likely not, given what his shares in equity would have
been worth now.
"If an innovative startup wants the domain you have, striking a balance between cash and equity could allow the startup to get your name without having to shell out a lot of cash." Morgan Linton - BoldMetrics.
In 2016, EventBoard.io was a small company focused on the development of an application that scheduled and organized office meetings to improve productivity. Its sustained growth led the startup to go beyond the limiting walls of conference rooms and calendars to expand its offering of work-related cloud-based solutions. In order to achieve this goal, a rebranding process was set in motion, which included (yes, you guessed it!) a change in their domain name.
EventBoard founders understood the significance of having a brand name capable of representing a more ambitious vision of the company. But the domain they wanted, Teem.com, already had an owner - Rick Schwartz.
The negotiation for the sale of Teem.com went on for months. Although the final terms of the agreement were not exposed by any of the parties involved, when the news was announced in October 2016, it was revealed that as part of the deal Teem invested in its matching domain name not only with cash but also with an equity component.
"This is a great example of a company that wishes to grow and in doing so understands that one of the steps in that process was moving from a longer .io extension and upgrading to a short, memorable and brandable .com extension." Rick Schwartz
The owner of Mint.com at the time, an investment banker who had run a fund called Mint Investments for years, didn't want to sell. Mint team offered him equity in the company's Series A funding round rather than a cash payment and after three months of negotiation, Mymint.com became Mint.com we all know. Mint.com got acquired by Intuit for $170 million in 2009.
"It was a three-month negotiation. It was one of the most difficult negotiations of my life…that's how important branding is to me." Aaron Patzer, the founder and CEO of Mint.com
Uber, the ride-hailing company, originally used the domain UberCab.com but wanted to upgrade to Uber.com. Universal Music owned the domain name and was willing to sell. However, Uber didn't have any cash to bring to the table so it offered Universal Music 2% of the company in exchange for the domain. The deal was snapped up by Universal Music and Uber got their perfect domain name by negotiating. They didn't give it up because of cash restrictions. Uber went on to become to become the highest-valued startup in the world. Universal Music sold their shares back to Uber for $863,000 way before that. At today's valuation 2% would've been worth approximately $1,600,000.
You can see from those few examples that even when cash is an issue, there are ways to get creative to the benefit of all parties involved. If you are serious about your brand but don’t have the funds to acquire your dream domain name, don’t give up. Feel free to reach out using the form below, we are always happy to chat.