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You should never spend $825K on a domain – but here’s why I’m glad I did (medium.com)
36 points by jgranof 4 months ago | hide | past | web | favorite | 56 comments

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.

To me at least covered.com would have been a better choice for an insurance company. Though the cost to benefit of $800k makes me seriously question if that money could have been spent somewhere else with better returns.

> Though the cost to benefit of $800k makes me seriously question if that money could have been spent somewhere else with better returns.

Do insurance agents still get residual payments on policies? I know after the first dot com crash, I was interviewing at insurance companies and that was a huge selling point to become an agent. If so, the ROI might not be so bad, but 800K is a huge nut to cover and I would agree is going to take a while to make back regardless.

Not such a big benefit when you have to wait 20 years to break even.

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.

I thought album cover

Edit: Why downvote a comment like this?

My first thought was, "cover charge" and maybe some site that lists them and offers deals.

"Looking for ladies night near you? Triple w cover dot com for more..."

Hmmm, tough crowd. I guess 6 figure domain discussions trend that way. Definitely a reason to avoid paying for them. Check!

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.

coverage.com would also be perfect.

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

Looks like someone already snagged it. :)

All decent .com names already are.

Just to toss in another: I first thought book cover, then later the full "Cover.com" (including the capitalization) makes me think of makeup.

I thought sports betting. It's pretty generic.

yeah, horrible decision and equally horrible article. too bad i can't short this company.

and let's be clear. the domain name isn't so good that he doesn't have to write SEO articles like this one.

Casper, Nike, Box, Amazon, Apple, ... Are those all bad decisions?

Pretty sure that Amazon and Apple registered their names quite early in the internet frontier days when domains were not very expensive. Not sure what Nike paid, but they were already a huge company by the time the internet came along. There's a big difference between a conglomerate dishing out a large sum vs. a series A startup.

If someone squatted Nike they could have sued and won the rights to the domain pretty easily, as it's trademarked.

I remember reading about Volkswagen fighting for vw.com back in the 90's, and the company that owned it wasn't a squatter but an ISP and hosting company called Virtual Works. Yet Volkswagen won anyway.

I would have squatted on it as part of my relgious faith on the goddess of victory. No court would take it away from me, on the off chance that I was serious.

My point was about:

> personally if I heard 'cover' outside of the context of this article I would not have made that connection at all.

Names don't need to be literal or obvious.

In the UK it is mostly referred to as "cover", which makes me suspect that's the case in most of Europe as well.

Hm, UK is pretty much the only dominantly English speaking country in Europe, which makes we wonder why you suspect that.

Even directly translated most German speaking folks would call it "insurance" or "being insured" first and "cover" (decken/gedeckt sein) having several equally specific meanings aside from insurance, and being mostly used by insurance selling/handling people.

That aside, Non-English-speaking people would typically not associate English words with something in their daily life, besides programming maybe, i.e. if we have frequently used terms in our own language. So in this field I would say it is quite irrelevant for the rest of EU what term is associated with insurance in the UK (France and their disgust for any non-French word for example?).

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.

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.

> a million bucks is nothing in his line of business

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

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.

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.

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!

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.

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

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.


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?






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:






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

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.

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/ 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.

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.

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.

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...

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".


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.

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 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".

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.

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.

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.

> 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.

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 :)

*The VCs/creditors would have an asset.

A competitor of this business is compare.com: https://www.compare.com/

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

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.

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

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 ?

Some serious confirmation bias in this article.

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.

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

insurely.com is available.

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


How to blow high six-figures on the 21st century version of a vanity license plate

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