When AI fellow startup friends Disclosure Having spent $1.8 million last week buying the www.friend.com domain name, he started a debate about what branding really costs, and how startups should spend cash. Founders of other companies like The loom And public They came forward to share stories of their own quests to lock down a domain, but the questions kept coming: Did the dude overspend for his domain? Does it really matter?
Avi Schiffmann, founder and CEO of Friend, told TechCrunch over email that the purchase has already paid for itself. And there may be a method to the madness, given that buying a domain name for millions of dollars is nothing special—Tesla paid an estimated $10 million “tesla.com” and mortgage startup Better.com paid off over a decade. $1.8 million for its domain in 2015, the year it was founded. According to And Some reportsOpenAI apparently paid $11 million for “ai.com”.
Alex Harris, co-founder of startup marketing firm Fiat Growth and founding GP of early-stage VC firm Fiat Ventures, told TechCrunch that getting the right to a name, domain and branding can have a big impact on how a company grows.
The right name or domain can help a startup be not only easy to find, but also easy to remember, Harris said. He added that “.com” domains are king (sorry “.ai” companies) – and when it comes to names or domains, smaller is always better.
“In many cases, when it comes to anything, the name is important. [promotion]” Harris said. “The name is easy to spell, easy to say. These are some of the things we talk about that are really simple, but many people overlook [them]”
One important thing to consider when thinking about a name is how often you want customers to interact with your business, said Oliver Tobia, a marketing professor at Columbia Business School. If it’s a consumer product that consumers will turn to frequently, or software that businesses will use every day, coming up with something unique and memorable, like Google or Twitter, can be a great play.
And if a company’s product is something that customers rarely refer to, or only when they need it, it’s best to choose a name that’s common enough to be easily found on search engines. Can come forward.
“If you [are] A product or service that [people] Not necessarily use often or maybe when they need you, they’ll Google or find you,” Tobiah said, referring to how someone would make locks if they were locked out of their apartment. Can find someone.
And in the case of startups that consumers don’t interact with on a daily basis—think health care companies—most big companies like Spring Health and CityBlock Health all have “health” in their name. ” to clarify what they do and possibly for SEO.
Harris feels that getting the name and domain right also adds legitimacy to a business. A professional-sounding name and domain helps people trust a company if they haven’t heard of it before, whether they’re customers, potential hires, or even investors.
“We all get emails. [companies] with a super long domain or a weird domain extension, and that makes it illegal,” Harris said. “If you have a domain that’s desirable, [people] Pay attention.”
Harris also thinks that spending $1.8 million on a domain, as Friend did, isn’t as crazy as it first seems. He said that if buying the domain helps the company’s business, which he predicts it will, the purchase will pay for itself over time. And a good domain like this can double as solid IP that can be sold if needed.
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Big companies can afford to spend millions on branding, but does it make sense for startups that are still building a product and going to market?
Both Harris and Tobiah caution that there are certainly things to keep in mind. In Friend’s case, both said the money spent on buying a domain name would only be worth it if it wasn’t preventing the startup from actually building the product.
“The name is important, but you have to sell and build a product,” Tobiah said. “If you’ve already burned 70% of the cash and you don’t have a product, investors aren’t going to be too happy about that. It can hurt your leverage. [more money] in the future.”
There are clear benefits to locking in your branding early on, but companies should also make sure they don’t paint themselves into a corner with a name or branding that will backfire on them later, Tobiah said. It becomes difficult. If a company completely changes its business, or chooses a name that is subject to legal action, that initial branding can prove costly.
It can also be risky to choose a name that is too similar to another company. If the companies are in different industries and won’t confuse potential customers, it probably won’t matter. But the stakes change dramatically if a similarly named company commits fraud or some other act that results in a less-than-ideal association.
Even in less strict terms, if a name is very similar, it can just lead to general confusion, Harris said, as did former New York City Mayor Rudy at Four Seasons Total Landscaping a few years ago. Happened in the case of Giuliani’s press conference.
Regardless of how Friend’s decision to buy his expensive domain works out, both Harris and Tobias said that the fact that we’re talking about their decision to do so shows that their strategy first It has been working since.
“It’s like naming a baby,” Harris said. “You get to a point where you say, I don’t care anymore. These five names are fine, just pick one and go with it. In that moment of despair, be patient and move on. This is very important. Don’t settle for something because it’s cheap. Think about the assets available and who you’re competing against.
Credit : techcrunch.com