
You should never spend $825K on a domain – but here’s why I’m glad I did - jgranof
https://medium.com/@karnsaroya/you-should-never-spend-825k-on-a-domain-but-heres-why-i-m-glad-i-did-7139f9c00728
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melq
The author makes it sound like cover.com is a super intuitive domain name for
an insurance company... personally if I heard 'cover' outside of the context
of this article I would not have made that connection at all. He does a pretty
bad job of justifying a pretty bad decision, in my opinion.

~~~
protomyth
I think bedding not insurance. I guess its a lesson on if the first thing to
come to your mind is as common as you think or can you make an advertising
hook that puts it into everyone's mind.

~~~
tmikaeld
I thought album cover

Edit: Why downvote a comment like this?

~~~
all2
I have no idea. This was my first reaction as well. I agree with another
comment in this branch: covered.com makes much more sense. A tagline like
"we've got you covered" just flows naturally.

~~~
amyjess
coverage.com would also be perfect.

"If you need coverage, just go to coverage.com!"

~~~
all2
Looks like someone already snagged it. :)

~~~
rambojazz
All decent .com names already are.

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hayksaakian
For nearly a million bucks you can build a brand on its own domain.

This is just an article trying to justify bad decisions in hindsight.

If you cant find a smarter way to spend a million dollars than buying a flashy
.com then I would seriously question the entire business.

~~~
onetimemanytime
Why is it a bad decision? The name is forever, a million bucks is nothing in
his line of business.

The brand with a "bad" domain name needs to be kept, you have to spend on it.

~~~
kambucha
> a million bucks is nothing in his line of business

they are just a startup now, $1M is pretty big money.

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rdiddly
The proof is in the pudding. Get back to me when you're either profitable or
bankrupt, and we can ask whether this was a good decision or not.

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ksar
Sounding in here - I bought the domain. Let's start with it was a lot of
money, and to the credit of some of the folks here it remains to be seen
whether or not the purchase was prescient or not from a ROI perspective.
Whichever way it goes, the purchase won't be the reason that we succeed, or
fail. Reasons for the purchase are enumerated in the article, but more than
anything else, we're in the trust business and our customers cross-reference
our web presence before spending thousands of dollars with us via our apps.
Insurance is a business with consumer scale, and best in class SaaS-like
economics (very low churn, predictable CF) - in this context, we became more
comfortable pulling the trigger.

~~~
brador
I think you made a fantastic decision on this. When you're going for a billion
dollar valuation you need to be impeccable. This domain name gets you one step
closer to that and saves on a costly rebrand later + it's a high value
resalable asset.

Easy IPO if you hit all the right notes. Good luck!

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shubb
Reading between the lines, they had an existing app with some name
recognition, probably following a bunch of advertising spend for that brand.

The mistake they made was not bothering to choose a branding friendly name at
the earliest stage. But they made their bed and this is them lieing in it.

The fact this required reading between the lines shows this is a terribly
written article.

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ez76
I'm not a branding guy but covered.com seems like it would have been a more
intuitive choice (and seems undeveloped).

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joeax
With all the new generic top-level domains out there like .biz .blog .pro even
.ooo (a personal favorite lol), and a whole bunch more coming out next year,
I'm surprised there's still a mad gold rush for .com domains. I was just
telling my kids how domain squatting was a thing back in the 90's and early
2000's, but I guess I stand corrected.

[https://en.wikipedia.org/wiki/List_of_Internet_top-
level_dom...](https://en.wikipedia.org/wiki/List_of_Internet_top-
level_domains#English)

~~~
styfle
Most users are able to identify example.com as a URL but not example.gq
because they have been trained for years to look for .com

This training will take some more time for other TLDs and will take more time
to become normal.

Even now, companies that start with a strange TLD but grow large enough will
eventually buy the .com which repeats the cycle that only .com is legit for
commercial services.

Anyone know of popular companies in the USA that don’t use .com?

~~~
mcyger
Zoom.us

Twitch.tv

BoingBoing.net

Chorus.ai

ABC.xyz

~~~
styfle
This is a great list! Twitch.tv is #31 according to Alexa!

One thing to point out, is that 4 of those are country-specific TLDs (or the
historic .net) which have been around for awhile so they might still have some
familiarity.

It starts to look very unfamiliar to non-tech people when URLs have a long
TLD, such as:

example.blog

example.website

example.foundation

example.engineering

example.international

------
chris_mc
This article is literally an advertisement, there is nothing interesting about
the story at all.

~~~
onetimemanytime
Advertisement but all because of the name! Another company sees cover.com and
says "they must be serious" and purchase through them. A few times and they
get their domain name money. You rarely lose money on a domain name.

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evanweaver
The final pre-commission price here is normal range for a short, common-word
dot-com bought by a motivated buyer from an unmotivated seller. It's fine.
Above $1M is crazy though; I think the brokers were softening them up.

We paid much, much less for [https://fauna.com/](https://fauna.com/) during
our seed stage and rolled up all associated domains along the way cheaply, but
we were also willing to change the brand if necessary, and had done some
investigation as to the "acquirability" of the domain when we were just
starting out.

I question the use of multiple brokers, though, that seems needlessly
expensive and guarantees that the negotiation will be hardball because no
relationships can be built.

------
raleigh_user
This might have been dumb but I run a digital agency. Use to write code
myself. Don’t anymore (saying this so no one flames me for not being a dev!!)

Insurance is one of the stickiest industries. Churn is almost ALWAYS net
negative. Referrals are HUGE and grow a biz that does no marketing whatsoever.

Just engaged with an insurance company for a project and saw some insight into
their numbers. Blew my mind. Software biz with similar renewals + low cost per
customer + profit margins would be very, very, very valuable.

So much money on a domain sounds outrageous. But even small insurance
companies are generating $1mil in cash a year. With no risk of losing it
(really-there’s always risk).

Amortizing this out with the (possible) benefits might make it a sticker shock
worthy of doing.

------
sbjustin
This may be irrelevant but I'm curious why he chose a picture of himself to be
at the top of his article? Seems completely irrelevant to the story but makes
me wonder about him.

------
simias
I was immediately reminded of "color.com", the social network that bought the
domain for $350,000. I remember that people thought that was preposterous at
the time[1]. I'm not sure that $825,000 for cover.com a few years later makes
a lot more sense. At least I hope for them that they'll be more successful
than Color.

By the way I just checked and color.com seems to now belong to a genetic
testing company, I wonder how much they paid for the domain, maybe the
color.com app made a good investment in the end.

[1] [https://techcrunch.com/2011/03/24/color-com-was-acquired-
for...](https://techcrunch.com/2011/03/24/color-com-was-acquired-
for-350000-the-domain-name-that-is/)

------
Dave_TRS
It's definitely too early for them to declare victory on justifying the $825M
domain purchase.

I wonder if this is a pattern for them to celebrate the vanity milestones - I
also noticed another medium post about the $27M they raised that "puts us in a
strong position to fundamentally change the insurance industry".

[https://medium.com/@coverinsurance/i-raised-27m-in-two-
years...](https://medium.com/@coverinsurance/i-raised-27m-in-two-years-here-
are-six-lessons-i-learned-4b4c48a934af)

Changing the insurance industry is a huge task and $27M is a drop in the
bucket - if I were there investor I'd hope to see their medium articles focus
more on real progress they are making to change the industry.

------
iliaznk
Does it have to be .com? Actually, when I wanted a short .com domain for my
project which was sort of a frontend for an S3 bucket I went to
[https://www.expireddomains.net](https://www.expireddomains.net) and found
that it was a great resource of short domain names! I don't remember exactly
how long I was watching it waiting for a name I'd like, but it wasn't really
long, maybe 7-10 days and my wait was rewarded with the name s3io.com, which,
I think, was something I couldn't even dream of – 4 chars long and pretty much
relevant! There's a Russian saying "It's the man who makes a name, not vice
versa".

------
briga
So spending $825k on a domain "has translated into sales". Great. What kind of
sales? It's telling that all the supposed benefits here are really vague.

Maybe they could have paid someone to come up with a domain name that doesn't
cost $825k.

~~~
iooi
Agreed. hicover.com is $3.7k on Namecheap. They could have had 821k in the
bank and just as good a domain name. They raised $8M on their series A
according to Crunchbase, of which they spent _10%_ on a domain name. Say they
sold 20% equity in that round, that's 2% of the company on a .com. That $820k
could have gone a long way to delaying the need to raise a B (which they did
14 months later for another $16M), and get more favorable terms/valuation when
the time came.

~~~
evanweaver
Correct, presumably the domain name is a capital asset that preserves its
basis, so the real cost is the opportunity cost of not spending the money
elsewhere. We don't really know this cost.

~~~
sqrt17
> presumably the domain name is a capital asset that preserves its basis

the domain name doesn't have an inherent value or basis, it's (presumably)
unlikely that the next Cover Inc would be willing the same amount within a
short timeframe of them wanting to disinvest from the name. Illiquid assets
have to pay for liquidity in such cases.

~~~
onetimemanytime
History--so far--shows that good, .com, names do keep their value. Granted you
may overpay and cannot sell at the bought price but cover.com is a name that
can be used by many types of businesses. So if they go kaput, they have an
asset :)

~~~
iooi
*The VCs/creditors would have an asset.

------
simulate
A competitor of this business is compare.com:
[https://www.compare.com/](https://www.compare.com/)

compare and cover seem similar. Both are short, common names that begins with
a 'c'

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karmakaze
This is one case where cover.me makes much more sense. I suspect within the
next half generation or so the 'only. com' is for real business will be over.

~~~
BrandsInt
We are selling now www.cover.life which can make even more sense when it comes
to insurance industry. And it is 80k only.

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uglydork
I am selling Pacemakers.com for 75K and its worth every penny if not more. Dot
COM is king and the marketing value and name recognition is worth every bit
you pay. If you want to start a new business do you want a name like
Pacemakers.com that is recognized worldwide and easy to remember or do you
want your clients and customers searching for you buried on Google - pace-
makers.gg ?

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nighthawk1
Some serious confirmation bias in this article.

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swoorup
Reading the comments I wasn't the only one thinking WTF did I just read.

He tries to justify without anything tangible. Well the company is built on
intangible things anyway.

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redhale
I absolutely love the beating this article is taking here in the HN comments.

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tiredwired
insurely.com is available.

~~~
warmblanket
I do not understand the "ly"-suffixed app name trend.

