Almost 10 Years On, and Fred Wilson’s Domain Advice for Startups is Still True

On April 28th, 2011, Fred Wilson took to his AVC.com blog to write about finding and buying a domain name. The article produced hundreds of comments and certainly seemed to make an impact among startup founders.

For those who don’t know, Fred Wilson is a venture capitalist and partner at Union Square Ventures. Through USV, Fred has made early investments in companies such as Twitter, Coinbase, and Etsy. Described as an “investor who cares,” Fred dispenses advice to his readers at AVC.com.

In his aforementioned April 2011 blog post, Fred wrote:

I believe that a good domain name is an important success factor in building and launching consumer web services. It’s not in my top ten but it could be. It’s certainly something we think about a lot when making investments and working with companies post investment.

He then immediately gave two examples of companies he advised to upgrade their domains. Delicious – from Del.icio.us to Delicious.com, and Foursquare – from PlayFoursquare.com to Foursquare.com.

Fred also wrote that between 2007 and 2011, acquiring good domains has gotten more difficult and more expensive, stating:

We used to advise companies to spend $10k or less on a domain, then we upped that recommendation to $25k. We recently upped it again to $50k.

Almost ten years on from that blog post and domain names are only becoming more difficult to acquire. It would be interesting to see how much Fred would advise companies to spend on a domain name in 2020.

For the best one-word .COM’s, I suspect it would be into the six-figure range. In 2017, domain buyer broker Bill Sweetman published a startup domain name price guide, estimating that startups would need to pay anywhere from $50,000 to over $500,000 for a one-word .COM:

An excerpt of NameNinja’s price guide. (NameNinja.com, 2017)

We certainly have evidence of startups paying six-figures or more for a domain in recent years:

  • In 2019, Ron Jackson revealed that startup Room acquired Room.com in a $1.5 million deal.
  • Also in 2019, Carrot paid a reported $565,000 to acquire Carrot.com.
  • Voice famously paid $30 million to upgrade from Voice.io to Voice.com.
  • Packet spent $350,000 to move from Packet.net to Packet.com.

There are numerous other examples with prices and many more without. Evidence of this can be found in a list I compiled of companies that have upgraded their domains since 2017.

 

The Noun Trend

Despite it becoming more difficult and more expensive to acquire premium .COM domains, Crunchbase noted that there is a recent trend away from “brandable” names such as Doostang.

In Fred’s original post, he says that a good domain name is short and memorable. It doesn’t need to mean anything and gives an example of Etsy. As Crunchbase notes, it seems like this branding method is becoming less prominent.

The trend is towards nouns, with brands such as Banked, Wardrobe, and Cured being founded in recent years.

Aside from this point regarding “brandable” names, Fred’s advice still rings true to this day. A good domain name is still an important factor in building and launching consumer web services. Although prices for the top domains have risen rapidly since 2011.

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