

How should I buy a domain name with equity? - billyj209

I just reached an agreement with a domain owner to purchase a domain for my startup via equity (the company is an LLC). Does anyone have any documents or ideas that I can use to draw up a contract?
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lsc
I strongly suggest avoiding giving out equity except to people you trust.
Sharing ownership is essentially marriage for the life and context of the
company.

(now, things are somewhat different if you have a heavy hitting, expensive
legal team on hand. Or so I imagine.)

As others have said, a domain name is probably not worth that much. I mean,
once you have it, and you associate that with your brand in the eyes of the
public, it's worth a lot. But it's your brand that matters, and right now,
nobody associates the domain with your brand, so it's a simple matter to pick
another domain. I mean, google.com? sure, the name is worth ridiculous sums
now. But in '95? maybe $100. if that.

I know this is just a stereotype, but if at all possible I would avoid doing
business with a domain squatter. If I did need to do business with a domain
squatter, I would assume that they would try to scam me, and act accordingly.
I would never give a domain squatter the trust that comes with a percentage
ownership in my company.

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barryrandall
If a domainer is willing to let a name go for equity, it's either not worth
much to them, or they're essentially loan sharks. I don't have data, but I'm
pretty sure the present value of most web startups is around $0, so this kind
of deal really doesn't make sense from their perspective.

Wait until you're profitable before trying to buy a killer domain name. You
can't pay your hosting, rent, or employees with a domain name.

If you're dead set on this domain name, renegotiate a cash price. Domain
Capital provides domain name financing, and Escrow.com will reduce your risk
of being ripped off. If the seller refuses Escrow, he's definitely trying to
rip you off. The domain name secondary market is rotten with fraud.

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profquail
Welcome to Hacker News, billyj209. You might want to prefix the title with
"Ask HN:", otherwise those readers just glancing over the newest articles page
won't know that you're actually asking for advice.

I'd say your best bet is to contact a lawyer (if you can't afford one, perhaps
you have a friend in law school, or your parents know a lawyer that owes them
a quick favor). You want to make sure that you cover all the "edge cases",
like:

\- What happens to the domain if the startup goes bust? \- Will control of the
domain be transferred away from the current owner? If so will it be
transferred to you personally, or to the company?

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byoung2
Is the domain name worth that much in the age of search engines?

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yannis
I agree. Unless the domain name is s*x.com I wouldn't pay for it and certainly
wouldn't give equity in exchange.

Your product will brand the domain name not the other way round.

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mannicken
six.com? stx.com? What's instead of the star, and why the fuck is it there?

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yannis
sex.com! Now the big question: why am I in this brain, but not in your brain?

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evanmoran
Make the product first, then buy the domain outright.

If I recall correctly this is what Facebook did. They started out as
thefacebook.com and then made the switch once they had money/success.

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rms
God knows how much that cost them though... Dropbox is in a similar situation
and is going to have to pay millions (in equity?) for their domain. To the
submitter -- I don't think it's an inherently bad idea because domains
certainly have value. Mint.com anyone? However, the legal issues here are
basically insurmountable on your budget, you don't want some random non-
accredited investor holding shares in your startup.

