Should You Really Spend $1.5 Million On A Domain?

“Why did I spend 7+ years, hire 3 brokers, and send over 200 emails to buy the 82nd most expensive domain in history,” asks Noah Kagan at the start of his recent podcast. Titled “What I Learned Spending $1.5 Million on sumo.com,” the podcast goes into the details of Kagan’s huge purchase. The marketing personality and former Facebook/Mint employee has some excellent takeaways here. Kagan offers some good points on making (and closing) deals, as well as taking the long view on the performance of a company. Still, we can’t help pointing out the elephant in the room.

It’s right in the title, but it’s also hidden in the podcast as Kagan talks about his justification for the massive buyout. For him, getting the name dot com is paramount. Our philosophy on this is well-documented. But instead of dropping a link and leaving it there, let’s go through Kagan’s reasoning on this point.

Going Legit

A couple minutes into the podcast, Noah Kagan tells the story of realizing that, in his words, “names matter.” We’re inclined to agree. But Kagan conflates a good name with a “legit” domain, and a legit domain with a serious brand. He uses banking as an example case, and we agree that most people wouldn’t use bank-of-america.io to check their balance. But an entrepreneur who drops f-bombs in his podcasts doesn’t have to convey the same kind of gravitas. Irreverent names or uncommon TLDs aren’t exactly killing startups right now. Tesla didn’t own tesla.com until recently.

Gut Feelings

Further into the episode, we hear Kagan’s litmus test for pulling the trigger on a purchase. We’re supposed to ask ourselves the following: how would we feel if someone else got it, and do we really really want it. A yes answer justifies spending money. While we won’t weigh in on whether this is good for buying houses or Corvettes, we have to disagree when it comes to URLs.

Let’s take the first case. If a company with the same name as yours might grab the dot com, they’re either in a different space from you, in which case you can use SEO and branding to make sure people can find you, or they’re a potential competitor, in which case it’s a lost cause and you might want to look into a name change.

The second case is basically an appeal to emotion. And while your emotions should guide you in naming dogs, kids, and boats, they need to take a back seat while you mull over dropping seven figures on a domain. We’re not saying AppSumo isn’t a successful company; far from it. But we wonder how much sumo.com had to do with it.

Maybe Noah Kagan has some ideas.