Here's why the Facebook.com domain shouldn't have been sold

[Infoproliferati]

The valuation of Facebook today is placed at about $70 billion. For this exercise let's place Facebook's valuation at $40B. IF the previous owner of the facebook.com domain had done some research on user growth stats of thefacebook at the time, he/she would have recognized the opportunity to offer the domain at 0 cost in exchange for only 1% of Facebook shares. TheFacebook would have had no choice but to accept the deal.

For purposes of this exercise I will be assuming that 5% of FB today is worth an even $2B, meaning 100% FB = $40B. So the exchange of facebook.com domain for a 1% share of the company would have been worth $40,000,000 today. And that would not have been the most expensive domain ever sold but would have been one of the most expensive domain transactions to date.

Are you sitting on the perfect domain for the next big thing? Do some research on your enduser and exercise some foresight before you name your price.

[draggar]

The next time you're selling a domain I'll offer you 1% of the shares for the business I plan to make.

In 2004 many "next big things" were coming out, MySpace had just launched, Wikipedia was growing and bloggers were just starting to appear.

Yet for each of these success stories, I'm sure there were thousands that failed and millions that just never caught on.

$200,000 is a nice chunk of change for a domain that isn't even worth a fraction of it.

[hugegrowth]

Easy to say in hindsight. Who sold them the facebook.com domain and for how much?

If you know you are selling to a social site or game site, you're right it is a good idea to try to do a deal for shares, or shares and cash. Or, a % of all future revenues the site makes.

[Infoproliferati]

$200,000 is a nice chunk of change for a domain that isn't even worth a fraction of it.

Very true. I'm not contesting it wasn't a great sale. Ok may be the seller should have asked for shares and 200 grand lol.

[Adam Dicker]

The original domain idea was facemash.com, Mark eventually let that drop.

... Facebook was originally called "thefacebook" and was open to a network of college students, but in August 2005, the company paid $200,000 to change its domain name to facebook.com.

-=DCG=-

[Acro]

Hindsight is always 20/20.

[tetrapak]

How many sites with rapid growth and great idea get to the level of FB, Twitter, Google? Yes, a handful only, so you can never purely rely on growth data. Look at Myspace, it never made it, and now it completely fades into history. What would you do with 1% share of Myspace?

[Infoproliferati]

How many sites with rapid growth and great idea get to the level of FB, Twitter, Google? Yes, a handful only, so you can never purely rely on growth data. Look at Myspace, it never made it, and now it completely fades into history. What would you do with 1% share of Myspace?

I don't know how much 1% of MySpace is today. It may not be much. But at the time of Intermix Media's sale to News Corp, 1% of MySpace would have been easily worth over $500,000.

Hindsight is always 20/20.

I agree. There was no way for the seller to have known. FB happens to have been the rare diamond. But we can't ignore certain lessons that could be learned. When exercising foresight and risk-taking, one need only be right once.

[Acro]

How much was facebook.com sold for?

I've had inquiries in the past about domains I own where the buyer offered a stake in the business but they offered no cash. I don't believe in handing over domains for a stake in "potential" - there has to be some money involved directly.

[junosama]

The problem with sites like this is they are hot for a while and than something usually takes their place. Very few companies and sites stand the test of time. Strike while the iron is hot!

[Gerry]

This is an exercise in futility - to hold what you think is going be the next big thing.

There's an app for that...

[Infoproliferati]

I've had inquiries in the past about domains I own where the buyer offered a stake in the business but they offered no cash. I don't believe in handing over domains for a stake in "potential" - there has to be some money involved directly.

Is there any other reason(s) why you don't accept a stake in the business beyond the "potential" for growth factor?

[hugegrowth]

It all depends. If Farmville didn't own their .com today, and you were the owner and they contacted you to sell, it would be a good idea to ask for a % of the game or business. Likewise if it was a promising, well known group or business, some cash and a % of something might be a good risk.

If you're dealing with an unproven/unknown group, then it's a high risk. The more you do like that the more chance at least one or two of them will work out, which is all you need. Making cash as part of the deal never hurts, because at least you get something NOW.

[skylineleong]

The original domain idea was facemash.com, Mark eventually let that drop.

... Facebook was originally called "thefacebook" and was open to a network of college students, but in August 2005, the company paid $200,000 to change its domain name to facebook.com.

-=DCG=-

Nice to know it