How We Bought easypost.com
by Jarrett Streebin
We launched EasyPost with easypost.co, which was good enough for our We knew long term we'd want to acquire easypost.com and we knew the price would continue to increase in proportion to the company's success. Given we were bullish on the long term prospects, we knew we had to acquire it quickly.
As soon as we raised our first $200k, we started poking around about how to acquire the domain. Since we'd already launched EasyPost, we thought it was pretty obvious who would be interested in the domain and emailed the company directly. If you're going after a domain that's more broad you should avoid emailing the seller directly. Since domains are often fairly illiquid and negotiated digitally, the main sources of leverage are time and price. Knowing the potential buyer gives a lot of leverage to the seller in terms of price. Given that, we also decided to hold off on announcing our fundraising until we had acquired the domain. We didn't want the seller to know we had raised any money.
Shortly thereafter, an investor introduced us to a domain broker. At first, like with anyone in the brokerage business given the typical conflicts of interest related to pricing of commisions (higher the sale price, higher the commission), we were skeptical, but the broker's recommendations were stellar.
After speaking with the broker, we learned that one of the main value props of a domain broker, just like with a real estate broker, is knowledge of historical sales. Good ones know who has bought what for how much recently and thus have a good sense of the market. The broker we used had a good sense for what the buyer would be willing to sell our domain for, as well as comparable domains that had been sold recently.
The second thing we learned was to use an alias. Like we said before, the more the seller knows about you the more leverage they have. Our domain broker had a few fake accounts complete with LinkedIn and Facebook profiles. These give you the opportunity to approach a seller and get a general idea where their head is at in terms of price, absent the knowledge of how big or small you may be.
Next, since easypost.com was owned by a corporation that also happened to do web hosting, email hosting (on easypost.com), and other web services, it was going to be a bit delicate. Buying domains from corporations takes a while since you're dealing with a bureaucracy, which means people are heavily inclined to say 'No', and it takes several 'Yes's for a deal to go through. The bigger a corporation, the longer it will take and the lower the likelihood of success. If the domain you're looking for happens to be owned by a large and/or public corporation, move on. Those can take forever.
Our broker got started by emailing a few of the contacts there. In our way of thinking, you email them politely, professionally, and get an idea for their appetite. Wrong.
Here's an example of the email our broker, whose alias we'll call Walter*, sent:
Hi my name is Walter, my partner Jarrett has been in touch regarding easypost.com.
We realize you guys have had this Domain for a while and probably at one point planned to use it. We get that, we fully understand where it's been and what it means to you.
We realize you guys aren't hurting for cash and you're not very motivated sellers. We'd owe you big time if you give some on the price tag. The potential PR value we could bring you guys not just now but later down the road - you could do a write-up on us, we'll sing your praises. Crazy good testimonials, whatever you guys want - you got it. We'll be your whipping boys. How about a viral video on how you changed our lives down the road!? Anything you want, name it.
Hell if you fly us over we'll cook, clean, and do your CEOs laundry for a month! We'll do anything it takes to reach a win/win, to reach an amount we're able to swallow, that we can afford.
Jarrett and I feel confident with a handful of days and making a mad scramble on this end we should be able to scrap together $10K GBP. We'll have to make a deal with the devil to pull it off. Anything it takes, we're very passionate about our project and we really, really need that .com to make it shine.
If you could see both of us right now we're on our knees, practically begging you guys to cut us a break and reduce the asking amount – take our offer. Work with us and we'll be in your debt forever.
Walter and Jarrett
Like anyone, when we saw that we were shocked. We thought there was no way an email like that would work, and we were pretty sure we were being had. That is, until the response came back a few days later. The person promised to look into the matter for us and we were stunned.
Shortly thereafter we learned their asking price was $30,000. Wow, we'd only raised $200k at that point and that was a tough pill to swallow. Fortunately, our broker let us know that domains are typically negotiated down 50% or more. $15k was still pushing it, but we knew the price would only increase and we didn't want to have to continue waiting to publicize the work we'd done on EasyPost.
Our broker also brought up other payment options, like cash and equity, or a longer term payout. If you're really tight on cash and/or the domain is really expensive, there are ways to negotiate around that. You can offer some of the company, or to pay out over a year or two. Obviously, you'd have to give up your identity to do these, but it's likely a premium domain. Also, in this case you'll need to talk yourself up if you're pitching the seller on equity.
After a few weeks of back and forth, in the aforementioned fashion, we settled on $15k. This was pricey for us, but the company was gaining traction and the price was bound to go up.
We used escrow.com to arrange the transfer. (Edit: I'm told escrowhill.com is great as well and cheaper.) We put in our bank details, the money was wired, and the domain was transferred.
If you're using an alias, you'll need an alias account at DNSimple or whichever domain registrar you're using. If you don't have one of these, you'll give up your identity before the domain is actually transferred. Make sure and have one of these setup before you start the transaction.
Once it's transferred, you're in the clear. All in, the transaction was $15,000 + 15% commission.
Buying your domain, if it's valuable one, can be one of the first big and delicate transactions a startup makes. Hopefully our experience helps.
* I received an email from a domain broker whose name was the previous alias of the alias I used, so I've changed the name to Walter.