Should founders invest in a domain? 6 things to know about buying a killer URL

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For startups, the right domain can do great things for building credibility, strengthening a brand and increasing site traffic – but is a memorable URL really worth spending tens (or hundreds) of thousands of dollars on?

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Berlin-based comparison platform Versus (previously Versus IO) has spent a six-figure sum on a new .com domain. After closing a Series A round recently and garnering reportedly 3.8 million visitors last month, Versus CEO and founder Ramin Far decided it was time take the startup to the next step with the new domain and rebranding. With the help of Far, we’ve outlined  six important things to note when buying a domain…

1) Think about your brand

“For any startup, building a brand is the most important step in taking your service or product global. It was vitally important that we closed this deal,” said Far. “The word ‘versus’ is recognised across the world and we believe this will strengthen our brand even further – the domain name is critical for future growth.”

“If you’re not able to build a brand – people don’t come back. I think the brand has to be polished, strong, and match what you are doing. It is crucial for a company’s success,” he added.

2) “The best domain names rose to the top”

“If you look at the history of internet companies, the best domain names rose to the top in their space. For instance, Foursquare vs Gowalla, YouTube vs Vimeo vs DailyMotion, Groupon vs LivingSocial,” explained Far. “There is also a tendency to get a .com at some point. A good example is Instagram, which was previously Instagr.am.”

3) Investors notice startup domains

Well-known VC and cofounder of Union Square Ventures Fred Wilson took to his blog to write a detailed post about the topic: “I believe that a good domain name is an important success factor in building and launching consumer web services. It’s not in my top ten but it could be. It’s certainly something we think about a lot when making investments and working with companies post investment.”

Last month, Versus closed a $2.8m Series A round led by Earlybird and joined by angel investors Dave McClure, Lars Dittrich and Dario Suter. “The first time we spoke to Earlybird, they brought up the idea and suggested that we get the Versus domain,” recalled Far.

4) Domain negotiations are not run-of-the-mill

Typical negotiation tactics (e.g. saying no to the first offer, building up time pressure etc.) do not apply when negotiating a domain because you will likely be dealing with an individual owner with few – or no – alternatives.

So what are some negotiation pointers for entrepreneurs looking to purchase a new domain?

“From the very beginning, you should demonstrate openness and establish a relationship. 99 per cent of the time, the conversation will occur via email, so everything you write should be well-thought out. Make sure there is no confusion. If you can’t communicate or write well, find someone who can,” advised Far.

“It’s also important to be highly responsive when communicating with the domain owner – this doesn’t mean you have to say ‘yes’ to everything but you should respond promptly to maintain trust.”

5) If you can’t afford your desired domain, start with a similar name and adapt

While it’s important to select the right domain from the very beginning, because switching to a new one later can be expensive and time-consuming, most young startups cannot afford to spend six figures on a good domain.

“For entrepreneurs starting out, I would suggest that you start with a domain that has potential and then adapt accordingly,” said Far. “However, you should begin with something that fits with what you’re doing, your space and has room to improve.”

He added, “It’s an art to choose the right name. In the end, you’ll have this name for a long time – you have to be proud of your name and your startup to succeed… But don’t spend too much time on it.”

6) Switching domains can be a long process

Versus was lucky to be able to complete its domain deal within 30 days, which is “a fraction of the time it typically takes for premium domain purchases”. However, the startup is already running into some technical problems and noted that the technical aspect of switching domains can take up quite a bit of time.

“We migrated Versus.com on Tuesday – we had to tell Google that there was a move and then we had to redirect all the old links to the new domain – it takes about two months before Google and everyone else really understands that we moved,” said Far.

Image credit: Flickr user derrickcollins

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Create, differentiate, iterate – 10 pro tips on relaunching your startup website
“Compare anything” tool Versus IO closes $2.8m round with Berlin VC Earlybird
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