When AI companion startup Good friend revealed it had spent $1.8 million on shopping for the www.buddy.com area identify final week, it set off a debate round what precisely branding is price, and the way startups must be spending money. Founders of different corporations like Loom and Public got here ahead to share tales of their very own quests to lock down a website, however the questions continued rolling in: Did Good friend overspend for its area? Will it actually make a distinction?
Avi Schiffmann, the founder and CEO of Good friend, advised For Millionaires over e mail that the acquisition has already paid for itself. And there could also be a technique to the insanity, given that purchasing domains for tens of millions of {dollars} isn’t significantly a brand new factor — Tesla paid an estimated $10 million over the span of a decade for “tesla.com,” and mortgage startup Higher.com paid $1.8 million for its area in 2015, the yr it was based. And in line with some reports, OpenAI apparently paid $11 million for “ai.com.”
Alex Harris, a co-founder of startup advertising agency Fiat Development and founding GP at early-stage VC agency Fiat Ventures, advised For Millionaires getting the identify, area and branding proper can have a huge impact on how an organization grows.
The suitable identify or area may also help startups be not solely straightforward to seek out but additionally straightforward to recollect, Harris mentioned. He added that “.com” domains are king (sorry “.ai” corporations) — and shorter is all the time higher in terms of names or domains.
“In lots of instances, the identify is vital when there may be any sort of word-of-mouth [promotion],” Harris mentioned. “The identify is simple to spell, straightforward to say. These are a number of the issues we speak about which might be actually fairly easy, however lots of people ignore [them].”
Olivier Toubia, a advertising professor at Columbia Enterprise Faculty, mentioned one nuance to contemplate when considering of a reputation is how typically you need prospects to work together with your small business. If it’s a client product that customers will flip to typically, or a software program that companies will use every single day, arising with one thing distinctive and memorable, like Google or Twitter, might be a sensible play.
And if an organization’s product is one thing that customers flip to much less typically, or solely when they should, it’s higher to decide on a reputation that’s generic sufficient to simply come up on serps.
“In case you [are] a services or products that [people] gained’t essentially use very steadily or perhaps once they want you, they are going to Google or seek for you,” Toubia mentioned, pointing to how somebody might seek for a locksmith in the event that they had been locked out of their residence.
And within the case of startups that prospects don’t work together with each day —assume healthcare corporations — many of the massive ones like Spring Well being and Cityblock Well being all have “well being” of their identify to make it clear what they do and sure for search engine optimization.
Harris feels getting the identify and area proper additionally provides a contact of legitimacy to a enterprise. Knowledgeable-sounding identify and area helps folks belief an organization in the event that they haven’t heard of it earlier than, be they prospects, potential hires, and even traders.
“All of us get emails from [companies] with a brilliant lengthy area or bizarre area extension, and it de-legitimizes it,” Harris mentioned. “You probably have a website that’s fascinating, [people] listen.”
Harris additionally feels spending $1.8 million on a website, as Good friend did, isn’t as loopy as it could appear at first. He mentioned that if shopping for that area helps the corporate’s enterprise, which he predicts it can, that buy can pay for itself over time. And area like that may double as strong IP that may be offered if wanted.
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Bigger corporations can in all probability afford to spend tens of millions on branding, however does it make sense for startups which might be nonetheless constructing a product and going to market?
Harris and Toubia each warned that there are issues to bear in mind right here, in fact. In Good friend’s case, each mentioned the amount of cash spent on shopping for the area identify is just going to be price it if it isn’t stopping the startup from truly constructing a product.
“The identify is necessary, however you must promote and develop a product,” Toubia mentioned. “In case you already burned 70% of the money and don’t have a product, traders might not be very proud of that. That will harm your capacity to lift [more money] sooner or later.”
There are clear benefits to locking in your branding early on, however corporations should additionally be certain that they don’t paint themselves right into a nook with identify or branding that might make it exhausting for them to pivot later, Toubia mentioned. If an organization utterly modifications its enterprise down the road, or chooses a reputation that’s topic to authorized motion, that early branding may show pricey.
It is also dangerous to decide on a reputation that’s too much like one other firm’s. If the businesses are in wildly totally different sectors and wouldn’t confuse a possible buyer, it in all probability gained’t matter. However the stakes change dramatically if an organization with an identical identify commits fraud or one other act that will end in a less-than-ideal affiliation.
Even in much less drastic phrases, if a reputation is simply too related, it may simply trigger basic confusion, Harris mentioned, like within the case of former New York Metropolis mayor Rudy Giuliani’s press convention on the 4 Seasons Complete Landscaping a number of years in the past.
No matter how Good friend’s choice to buy their pricey area works out, each Harris and Toubia each mentioned the truth that we’re speaking about their choice to take action exhibits their technique may already be working.
“It’s sort of like naming a child,” Harris mentioned. “You get to the purpose the place you say, I nearly don’t care anymore; these 5 names are nice, simply choose one and be carried out with it. In that second of frustration, be affected person and push via. It is extremely necessary. Don’t choose one thing as a result of it’s straightforward, as a result of it’s low-cost. Take into consideration the property accessible and who you’re competing towards.”
