Editors note: This post has gotten a lot more attention than any of my previous Medium posts. The overwhelming majority of the comments have been positive. But there are always some negativity, no matter what you write. I just want to say that I think everyone involved walked away happy with the outcome. This topic (domain issues/acquisitions) is not written about often. It is a touchy subject. The story could have gone the exact opposite way, the owner didn’t want to engage and we changed our company name. We took a risk, it happened to pay off. However, no one is perfect. We definitely made mistakes while going about it. Threatening legal action was pretty stupid and childish on my part. I’ve definitely learned from the experience and I think it is good to share these type of lessons with the startup community.
Also I wrote a reflecting post about the feedback received here.
If you would have asked me a month ago if I thought we’d be able to acquire SocialRank.com I would have said “not a fat chance.” Things looked dire in Michael’s and my attempt to purchase it from day 1. But we now own it and I’d like to share the story of how it all went down.
Before I explain, I must give major props to one of our advisors, Eric Friedman. Most people don’t know this, but Eric consults for companies looking to acquire domains. He got usv.com for Union Square Ventures, Foursquare.com for Foursquare and a number of others. He was instrumental in helping us communicate with the previous owner of SocialRank.com. Every time he suggested something, it ended up working out for us. I’m confident we would not have obtained the site without him. If you are looking for someone to help you with this type of thing you should hit him up or ask me for an intro and I will connect you- Ataub24@gmail.com).
It all started at the beginning of January. Michael and I left Dwolla to start our own company. We had a general idea of what we wanted to build (a tool to help brands find out more information about and better connect with their followers across social networks, starting with Twitter). But we couldn’t come up with a name when we announced, so we incorporated as Modern Mast Corporation (Mast taken from our initials: MS and AT).
A few days after we started we decided to go with SocialRank, partly because it was a great name and nicely describes what we do and partly because I happen to own @socialrank the twitter handle from something unrelated. We saw that no one had trademarked the name “SocialRank” and SocialRank.co was available. We quickly picked that up as well as SocialRankapp.com and a few variations of the name.
Hitting Up The Owner
Then we emailed the owner of SocialRank.com.
Willing to sell SocialRank.com?
was the subject line and
Let me know! — Alex
was in the body. We decided to move forward with the name as the only thing on socialrank.com was this:
We didn’t think there was anything going on. After 14 days of not hearing back I hit the owner again:
I’m checking in to see if you are willing to entertain selling socialrank.com?”
This time the owner (self described “active domain name trader” on LinkedIn) responded:
“Hi Alex, no sorry — I have been developing a project specifically for this domain the past three years… close to launching it now.
But good luck with what you’re doing… if it’s related, perhaps we might bump into each other down the line…
This sucked. I responded quickly with:
Thanks XXXX. If you ever reconsider- let me know!
Michael and I were bummed we couldn’t acquire it but decided to keep moving forward with the name, thinking that maybe one day the owner with change their mind.
Moving Forward Anyway
So we moved forward and launched SocialRank on February 25th, 2014. We were picked up by TechCrunch, Mashable, Business Insider, The Next Web, Forbes, The Verge, and a few more places. A few days later I decided to hit the owner of SocialRank.com again. This time I tried to get the owner on the phone.
We launched SocialRank this past week.
Would love to chat if you are open to it.
To be honest, at that time I thought the owner was just a domain squatter. Looking back, this email is a little strong for a first follow up. Their email address was “Their first name + domains @” and to be working on a product for three years and not having any sort of site, I was just very skeptical anything was going on. The owner responded.
Hi Alex, we’ve invested heavily in building a social analytics tool to be branded under socialrank.com. There’s a lot riding on it. Two identical brand names operating in the same space… it’s going to really mess up our plans.
Congratulations on launching your service, but I’m not sure how to react except with concern for all the time, effort, money, and strategic partnerships that we have vested in the socialrank.com project over the past several years.
What would you like to discuss?
You can reach me on Skype: XXXXXX
We got on Skype together and spoke for 10-15 minutes. I asked if he was willing to sell now that we were publicly known as SocialRank, he said no as they are going to continue working on their company. I said maybe it is best if we keep in touch once month or so to see where each us are. He said sure.
One other thing to note is that when we launched on Feb 25th we registered the SocialRank trademark with the USPTO. We had registered the in-use and file date as Feb 25th. I mentioned this to the owner of SocialRank.com (maybe stupidly) and next thing we knew they had filed with an in-use date of 2011. This plays out later.
Keeping In Touch
So every month I would email the owner asking what’s new. I would try to catch him on Skype and check in. Then in April I had an idea that would potentially make us both happy. I emailed the owner asking if they wanted to get on Skype. He said to write out whatever I had in mind and he would review it to see if it was worth chatting on Skype. So I did.
The gist of it was: we launched, people know us as SocialRank, we’ve been written up by countless press outlets, we are included in the SocialRank Wikipedia page, we have thousands of brands using us, and they haven’t launched their site yet. If there are two SocialRanks, no one will win. I told him that if he agrees to sell us SocialRank.com I will help him get press and raise money for his company under a new name.
Losing Business Because Of .com
At the same time, SocialRank.com now had a new homepage. The homepage was confusing our users. It said that you could now request access to SocialRank. We had a lot of people tweet about wanting an early-access code and people emailing us personally asking us for early-access. For every 5 people that contacted us, we probably lost another 10 that didn’t. Here is an example of someone from social media at @United asking for a code (hint: we don’t have a code, just log in with Twitter):
I emailed the owner again about the potential of moving forward with my laid out plan. The owner responded, things were not looking good. We had upset him:
The problem is, you approached me to buy the domain before you launched and before you had applied for a trademark. I told you that the domain was in use, and you then proceeded to register the TM and pressed ahead with the launch. I think that is quite a strange thing to do….
The email goes on but he wasn’t having any of it. He said other companies had tried to buy it and he wasn’t interested.
I decided to be a little more forceful in my response. We were losing users because of this and the domain played a big part in that. I told the owner that we were first to file for the trademark and we’d be talking to our counsel about options because they were hurting us with dilution of our brand. Not only were people thinking we weren’t live, but a few Fortune 500 brands assumed SocialRank.com was us and it was obvious that it turned them off to us until they found out we were SocialRank.co. I asked the owner to take down the landing page by next Friday or we would have to move forward with legal actions.
Should We Go The Legal Route?
That email was sent April 10th. No response from the owner. The Friday came and went. On the 28th of April we spoke to Cooley, our law firm, and learned some of the things about first-to-file and first-to-use. A cease-and-desist was probably not going to fly. We were first-to-file, but they were alleging first-use. It would take a court to find out if they were truly first-to-use. On top of that our legal team said that “SocialRank” was most likely a dictionary term and wouldn’t work as a trademark. We had no recourse.
I sent one last follow-up to the domain owner on May 5th after not hearing back for some time. I shared what we learned from our lawyers. I was authentic. I shared that we were losing business because of this. And I, for the first time, put out a number we would spend to acquire the domain.
I sent it, thinking there was no chance we would ever get Socialrank.com. Michael and I started to think about switching names and what that might cost us in terms of branding, and what we might switch the name into. Then on May 21st, two and half weeks later, which is a lifetime in startup-world, the owner came back with a different tune.
The Owner Comes Back
The owner came back saying that they had reflected on my last email and originally didn’t want to give the domain up but now think if we paid a certain amount we could close the deal. The amount was a lot more than we could afford. The owner also wanted a piece of our company for the domain. This was a step in the right direction but the option as it stood was a complete deal-breaker. We needed to get on the phone.
We spoke on the phone, explained that a piece of the company is off the table because we had raised funding and our investors would never allow us to have this on the cap table. The owner accepted that but still wanted a much larger amount of money than we could really afford or justify. After the call we spoke about it and decided to stand our ground with the amount we could pay. It was already more than what we wanted to spend but we didn’t want to lose momentum with the owner. We went back to the owner with a reiteration of what we could afford and offered to put it in Escrow.com and have it waiting for them to accept.
The owner came back saying that if there was some more movement on our offer they would go for it. This signaled to us that they were saying they had checked out on their project and wanted to sell. We knew we were close. The owner threw out another number that was in between our number and theirs. It was a little closer to ours but still out of the range of what we were going to spend.
I made a pro/con list and shared it with Michael. Here it is below:
- Don’t lose business because of confusion
- More legitimate → .co are for hacks and if we ever want to be a legitimate business we needed the .com
- We should have an easier time around trademarking
- Changing name might be more costly in user + brand loss
- If we get bigger the price will only go up
- They won’t sell it to competitor
- The price is more than what we want to pay
- The principle of the matter
Pulling The Trigger
We needed to do it. But we still wanted to negotiate on getting the price lower. We used a strategy Eric taught us here that I’m not going to share because I don’t want to share all of his secrets (seriously if you need help with domains, Eric is the man) but it did the job and we only paid a small amount over what we originally offered. We quietly switched over to SocialRank.com last week.
EDITOR’S NOTE: A few people got upset about this paragraph. I just want to make it clear that we didn’t blackmail or do anything nefarious here. It was more a negotiating tactic once we decided the ceiling of how much we could really spend. The domain owner decided it was worth getting cash instead of continuing on a non-existent side project.
What I Learned
1) Money talks. Specifying a dollar amount speaks louder.
2) Never give up. I NEVER EVER EVER thought we would end up with the domain. I’m not sure why I kept trying. Maybe out of old habits of following up and being persistent. Persistence pays off.
3) Get help if you don’t know what you are doing. The turning point of acquiring the domain magically coincided with Eric helping us. Coincidence? I think not. If you need help with certain company tasks, get professional expert help.
4) Negotiation is an art that is learned. You have to be okay with walking away. In the past when doing BD/Partnerships at Aviary and Dwolla, I did very little negotiating. It was an out of the box API. Take it or leave it. Negotiating the domain took almost a month until the owner decided he was ready to sell. We were patient. We didn’t freak out, act impulsive and say yes to the first option offered. I think the owner saw us as balanced and wanting it but not reckless. This is why we negotiated it to a little over what we originally offered.
5) This is a small thing in the scope of building our business. We have big plans that people will begin to see in the next few weeks. This has been a great accomplishment but needs to be put behind us as we continue to build our business.