I was going to delete this "dupe" but since the discussion has kicked off here, I'll keep it. However, if an admin wants to "fix" the link to point to the original TC source, please do so! :-) Mea culpa!
If he was just trying to make money by flipping the domain name, than it might be a savvy business move. But his goal was to start a successful business and make more than a few hundred thousand dollars.
He could have named his company: randomstartupdeals.com, or something not as succinct as startups.com but much cheaper. Then he could have used that $500k to extend the life of his business (possibly through another pivot or two).
The domain was purchased in 2008. The startup that failed was launched only a year ago. So the $500k spent on this domain could not have been used for the daily deals venture because it didn't even exist yet.
However you are correct if a startup gets $X funding and spends $Y on a domain and then runs out of funding, if having $Y in cash at the end would have given them enough runway to significantly change their odds of success, spending that money on the domain might not have been the best idea.
It doesn't appear that is what happened in this case, though.
Exactly what I came to post. Where is the part where he wasted money on the domain? If he had bought startup-deals.com for $500k that would be a waste. What he has now is a prime piece of very valuable real estate that is currently occupied by a company that is going out of business. I'm sure lots of startups that get shut down wish they had an asset like this left over at the end instead of just a whole bunch of code and some email addresses.
I believe the maximum amount of money that could be spend on a domain is $15, however more expensive (!) TLDs do exist. We spent an overnight to find the right name for our open source mobile analytics application Countly (http://count.ly).
Overspending on a domain is a habit of past, and doesnt't bring you any advantages. Focus more on marketing, product and usability.
It's obviously an amazing domain and to say it's a waste, might be a little drastic. It does seem about on point or even a little high as far as its value on its own but I think that he could at least recoup that initial investment.
Anybody thinking of starting an Expensive Domains brand? Kind of like the Prada of domain names. Names don't have to be premium domain names, they'll just be absurdly expensive.
Some people don't agree, but seriously: Hacker News these days is much more about startups than about hacking. Just look at the front page. This article itself is about a startup and has nothing to do with hacking.
Yes. Spending money on domains is a waste.
Last year, I started a company called codeincloud, but the domain cost around around $5000.
I just changed our company's name into kodeincloud :) (It's more sexy than codeincloud and and cost $12)
Recently I just purchased another domain for one of new product. Actually I named the product just after I got a domain. It's Dokeeno (http://dokeeno.com)
The point here is don't spend on domains and name of your company, Just build the brand & product
The title and story is tacitly saying that spending $500K on a domain is bad. I disagree, but I agree that they made a mistake on spending $500k for this domain, given their business plan.
Some domains are rightfully worth millions and millions.
My take on domains is that they are way too cheap. I would love to pay $500 per year for a domain that I sincerely NEED. Domain is indeed a good start, but because they are so cheap to grab, there is a "dictionary rat race" to hold on to every possible word that dictionary has to offer. I think this fact alone played a huge role in entrepreneurs giving up on "awesome" names and just going along with creating a new words: like flickr instead of flicker, plus hundred other examples.
A website I started for $10 turned into a website doing millions of dollars of revenue a year. I would not have started that website if the domain cost me $500 because I didn't have $500. Hiking prices isn't the solution, all that would do is exclude "the little guy" and increase the resell values of domains, further excluding smaller organisations / individuals.
both set up for $10 (each) at a point where I was unemployed, had nothing beyond the few $ I made freelancing, both now doing over 1,000,000,000 page views a year (with adverts). Wouldn't have existed if domains were priced at $20 or more each (I had $40 to my name at the time, if I remember correctly).
Those are actually a special case. You're trading on someone else's trademark, that's what made those domains work. Usually domains like this are shutdown with an UDRP.
If I could register domains like AmazonDeals.com I could make a killing too, but they would get shutdown instantly.
Well of course there are intricacies associated with my example, but the general point is what matters:
Websites that do exist that are making a lot of revenue and employing a lot of people would not exist if domain prices were changed to be only affordable by those with substantial income. I've seen other HNers talk about this before, I'm sure if you don't like my example I can find other examples that don't have anything to do with trademarks.
> You're trading on someone else's trademark, that's what made those domains work. It's likely both could be shutdown with a UDRP.
Also specific to this point, no, we have been permitted to use the Minecraft trademark since day 1. We can't be shut down (not that they would ever want to).
I don't think there really are that many examples where $10 domains (registered in the last couple years) were a key to success. I'd be sincerely interested to hear examples where that was the case.
Most people who are genuinely prepared to put effort into building a business would be willing and able to spend a bit of money. Maybe $500/yr is too high (I think so) but I seriously doubt $100/year would stop anyone who was at all serious.
What do you define as success? For me success is once something becomes self-sustaining (paying the employees wages etc.) and I can name quite a lot of people I work with today that would not be in the position they are now (living off their websites) if domains were $500.
Maybe my world view is skewed because I spend a lot of my time around people that build sites as hobbies that turn into businesses and not true startups like Instagram or Twitter.
I forget the persons name, but just last week a hackernews user posted about their top 400 (I think it was 400?) US website that they started in high school as a hobby, I doubt they would have started that if domains were priced at $500.
> Websites that do exist that are making a lot of revenue and employing a lot of people
I dont fall for this reasoning. Same way you could tell a cop to leave that cocaine dealer alone because selling drugs is his only "job" and he has a family of four and uses his profits to buy diapers.
If you bought a good domain, regardless if it was $10 or $500, AND obtain a copyrights to use the trademark, you are in a different category - your success is not based on cheap domain, but rather the fact copyright owners cannot go legally after you.
I still stand behind my point. If you truly believe in your startup, then you would shovel camel shit for six months just to get that $500 to make your startup come true.
I don't get it, are you suggesting that everything that makes money has to start its life as a startup with a good domain, a "ceo" and a plan? I was a dumb 17 year old kid making some fansites for a game I liked and now they make millions of dollars.
I'm not saying we were successful because the domain was only $10, I'm saying if the domain would have cost more than I could afford ($500 was the arbitrary figure provided above) then I would never have created the websites, just like many people I know.
The company I work for currently owns quite a lot of video game fansites, they're acquired from the creators and the original creators are hired to manage them. From the 50+ websites I see listed in our analytics I can tell you the majority were started as a hobby by one guy/girl but now help support many employees and provide real revenue... people that had a passion for their chosen subject matter and didn't care about making money and as such wouldn't have been able to invest $500+ in it.
There is a world outside the hackernews idea of making money online. I started the sites because I liked the game and wanted to provide value to other people, I didn't care about money and I still don't (even if I do live in a nice apartment). The company I work for was started as a hobby and now is a profitable enterprise with big name investors.
I agree with you, but there could be a cheap domain like .info or .us or .net, and then there could be .com as it used to be considered "COMercial", and should be more expensive.
We were profitable the day we decided to take revenue (2010), but we're not really a good example of bootstrapping or startups doing well or anything like that because we were supported by the success of Minecraft, we succeeded because Minecraft succeeded, not because we did anything.
I started the websites when I was 17 (I'm 20 now) just out of high school and living with my parents, so I lived off of them (and paid rent with freelancing money and at one point I was on unemployment benefits).
This would eliminate a lot of hobby blogs and websites that made the internet such a great place.
As someone who paid $8000 for his domain, I don't believe domains are currently overpriced. You can buy prime real estate on the internet for less than than the quarterly lease companies are paying for physical prime real estate in shopping areas.
I was going to delete this "dupe" but since the discussion has kicked off here, I'll keep it. However, if an admin wants to "fix" the link to point to the original TC source, please do so! :-) Mea culpa!