Don’t Suggest Your Domain Name for a Friend’s Startup

When a personal friend mentions a search for a brand for a new business or a rebrand of their business, you might want to think twice about mentioning one of your domain name as an option. It may be nice to offer an assist to a friend who might be in the market for a domain name, but the offer could backfire if it is considered.

Domain name negotiations can be challenging, even under good circumstances. Trying to come to terms on the sale price of a domain name is usually difficult. The buyer, who may be constrained by the acquisition budget, business partner, or supervisor, wants to pay as little as possible. The seller needs to get the best possible price for a domain name, particularly on irreplaceable assets. Working with an unknown counter-party is tough, but negotiating a business deal with a friend poses unique challenges.

When a domain investor offers up a domain name for consideration to a friend, the friend probably thinks a “friends and family” deal could be had. It’s one thing if you’re selling replaceable widgets, but with a unique asset like a domain name, this kind of deal is not feasible. Domain names are not easy to replace, so there’s a huge opportunity cost when discounting the asset for a friend. It’s easy to walk away from an unknown third party when you aren’t close on valuation, but it’s much more difficult with a personal friend who really wants the domain name for a good price.

Every conversation with a friend will turn into a negotiation for the domain name. It can put a strain on a friendship, particularly if the friend thinks the domain name was offered up because a good price would be given. Complicating things further, a friend who knows about the domain name business would likely know it’s a straight up financial consideration that is being made in the negotiation. When domain investors can sell their assets for at least 10x the acquisition cost, it might rub a friend the wrong way when the price is fairly inflexible.

I wouldn’t offer up one of my better domain names for a friend looking for a rebrand or a new brand. I might offer up something I think is easy to replace, but I don’t want to muddy up a friendship by negotiating with a personal friend on a unique domain name.

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Original article: Don’t Suggest Your Domain Name for a Friend’s Startup

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