In our quest in building a profitable website, many will think the work starts with registering a domain name. However, as Spencer Haws explained it, your first step is actually doing research and picking a niche. Once you are set on that, then you choose a (domain) name. So if you missed that interview I recommend you go back and read that first. Nothing worse than picking the wrong niche!

When it comes to choosing a domain name I invited Michael Cyger to join us and share his thoughts. Michael started a very popular domaining blog and podcast DomainSherpa.com back in 2010, and most people know him from there.

Recently Michael Cyger started DNAcademy which I attended and was able to learn a few tricks myself! I am thrilled to recommend it, so if you have any questions before signing up, let us know in the comment section. I am no newbie when it comes to domain names myself (I wrote a white paper on the topic), but it’s always to brush up on your skills, even if you don’t plan to become a domain name investor. These skills also come in very handy when:

1. You are evaluating a website for purchase / investing
2. Plan to own / build more than 1 website
3. Protect your brand online

Goran: Michael, can you tell us a little bit about how you got into the domaining business in the first place? What were your first wins and loses?
Michael Cyger: In 2000 I started an online media company on the side while working full-time at General Electric. I needed a domain name but as all entrepreneurs find at one point or another, all the obvious good domain names were registered—most notably, the exact-match domain and the domain with an “e” in front of it (which was popular at the time)—but luckily the exact-match domain with an “i” in front was available so I hand registered it. (Goran: Just for you non-domainers out there. Hand-registering a domain name means buying several domain names one-by-one via a domain registrar for the base price. Some domainers use software for registering a ton of domain names in bulk without looking at exact domain names they are registering. And now, back to Michael.). It was the first of hundreds of domain names that I would later own for my media company, for ideas I had for new ventures, and for investment.

I remember one time back in 2004 when I wanted to buy a defensive domain name for my media company and discovered that while it was already registered to someone else it was expiring soon. Trying to “catch it” when it expired, I paid $70 to Pool.com but ultimately was unsuccessful in securing the domain. I was discouraged, but I had a $70 credit that I had to use within a year or lose it. Months later, on a long list of domain names that were expiring soon, SunPill.com caught my eye. I placed a backorder for it and got it. I figured someday someone would invent a pill that you could take to look suntanned without having to go out in the sun and worry about skin damage or cancer. About two years later I was contacted by the founder of Banana Boat sunscreen, who told me he had invented a pill to provide sun protection from the inside out. I loved the idea and agreed to sell him the domain name for $7,500 plus a case of Banana Boat sunscreen.

As for first losses, I’m sure I purchased plenty of domain names in .net, .mobi and with hyphens that I later dropped because they were worthless in all respects – like domain-sherpa.com and ctqmedia.net. As an entrepreneur and eternal optimist, I tend to forget the failures and focus on the positives – but the lessons learned stick with me.

Goran: I am going to play devil’s advocate with this question, so bear with me. I know plenty of successful million-dollar businesses with lousy domain names. How do you explain that, and where is the leverage in a good domain name?
Michael Cyger: Of course any business can launch on any domain name. Pick the worst domain name imaginable. Yes, you can launch and build a business on that. But it’s going to cost that business time, resources and money to do so over the long term. Let me explain…

I typically see startup businesses selecting a domain name that’s available for hand registration because they say that they don’t have a budget to buy a better one. They end up with a domain name that’s hard to spell, fails the “radio test,” is long and prone to spelling errors, has a top-level domain that people aren’t familiar with, is “gimmicky” with repeating letters or missing vowels, or is easily confused with other businesses.

Recently I discovered a company called Snyk.io that has raised $32 million to date. Cool company that is focused on enterprise security. But let’s say I was talking to you about the company so you only heard its name. If you wanted to check out more about it, it’s unlikely you’d know or remember to spell the company snyk, much less that the top-level domain is .io.

I can guarantee you that at some point someone is going to send an email to [email protected] or some variation of that. Without clear knowledge to the contrary, most people simply default to .com.

Now consider if they selected a real word like “deadbolt” for their enterprise security company and paired it with the .com top-level domain. No confusion in any of those areas, and it’s easily spelled correctly. It also connotes a sense of security, like the deadbolt on your home’s front door.

I’m going to guess that snyk.io was registered for the regular registration fee of $20-30 initial cost. But how much is it costing the company when customers and suppliers ask them to repeat their email address spelling or when they don’t receive the emails they expected? How much is it costing them when they go to a tradeshow and buyers later visit snyk.com only to find a website in Japanese?

These companies are trading the up-front cost of buying a premium domain name for years of hidden costs, not just from a lack of productivity in communications but also from being associated with a weak brand. And we haven’t even talked about the authority upside a premium domain name lends a business.

“These companies are trading the up-front cost of buying a premium domain name for years of hidden costs, not just from a lack of productivity in communications but also from being associated with a weak brand. ”Click To Tweet

Companies with weak brands and confusing domain names in highly regulated fields like healthcare or financial services pose a particular problem. Imagine if your healthcare or banking records were emailed to the wrong address because of spelling, top-level domain confusion, or a typo—unfortunately, it’s happened.

So to answer your question, there are exceptions to every rule, including successful companies that are built on a lousy domain name. But in most cases, a weak brand is like a weight around a company’s neck, keeping it from reaching its full potential. As my friend Andrew Rosener of MediaOptions likes to say, “It’s like trying to build a skyscraper on top of a bed of sand.” Choose the bedrock of a strong brand and domain name if you have the ambitions to build that high.

Goran: What tools and tactics would you recommend to someone who is looking for a great domain name in a small niche?
Michael Cyger: If it’s a small niche, you can usually secure a premium brand and matching domain name for a few thousand dollars. Over the lifetime of the business, it’s a very small portion of expenses and it’s an asset that endures.

For example, when I launched DomainSherpa in 2010 I brainstormed many different names but I settled on DomainSherpa.com. It had the keyword “domain” in the name, included my vision (a “sherpa” who helps you navigate dangerous terrains with skill and knowledge), wasn’t too long or easily misspelled or confused, and was in the .com top-level domain space.

Of course, DomainSherpa.com was registered by someone already and I could have easily found an alternate brand that I could newly register for $10. But by negotiating with the then-owner, I was able to secure it for around $500—a bargain for the domain name that would be used to generate five to six figures in annual revenue for many years.

For companies targeting millions in revenue, I would suggest that they look at their company brand and domain name in perspective to that revenue. They could purchase a single dictionary word in .com for tens of thousands of dollars.

And for companies looking to become the next “unicorn” with $1 billion valuation, then think just as big with your brand…Box.net upgraded to Box.com, UberCab.com upgraded to Uber.com, and SlackHQ.com upgraded to Slack.com. Big vision companies need a big brand.

Goran: If I found a great domain name for my niche, but it is taken, how do I proceed? How can I get the domain that is already registered? And how can I find good alternatives if I can’t afford the one already registered?
Michael Cyger: First, you should make sure you’re on the right order of magnitude when pursuing a domain name for purchase. See the HowMuchIsADomainNameWorth.com Price Guide for guidelines. (Will these guidelines work in every case? No. Are they a rough estimate for reasonable owners interested in selling a domain name? Yes. But remember, even though you’re offering fair market value doesn’t mean that someone is obligated to sell.)

Now, do a whois lookup and reach out to the domain name owner to ask if they would consider selling their domain name. If they respond affirmatively, then start negotiating. If they fail to respond, email or telephone again, and again. Noah Kagan pursued the owner of Sumo.com for 7 years before finally purchasing the domain name for $1.5 million. I pursued the exact match domain name of my media company for 5 years before the previous owner finally decided to retire and accepted my offer. Persistence pays off.

But so does financial creativity. Kagan didn’t just pay $1.5 million in cash up front, he set up a payment plan that allowed him to finance the purchase of the domain name through the cash flow of his business. And UberCab purchased Uber.com by offering 2 percent of the company.

Sometimes the whois record will be under privacy, or General Data Protection Regulation redacted, or the contact information will be outdated. In that case, using a historical whois service like DomainTools.com or domainIQ.com can come in handy. And in some cases, looking at the Internet Archive Wayback Machine might point you to a name or functioning email address. I’ve even known founders to hire private investigators to track down the contact information of people based on previous whois addresses.

If you don’t want to pay more than $10 for a domain name no matter what, then it’s time to get creative. Try some domain name spinners, ask your significant other and friends for ideas, or take your most creative colleague out for a coffee. There is power in the crowd. Make sure you create one big list of options that you can then compare and contrast. You might also want to consider which brands have available domain names and matching social media handles.

Goran: Where do you buy domain names, and why there? Would you recommend the same registrar to someone who owns less than 20 websites?
Michael Cyger: I buy my domain names at two registrars: GoDaddy and Uniregistry.

I like the Domain Transfer Validation Service that GoDaddy offers their premier accounts (those customers with about $5,000 spend per year through all products at GoDaddy), because they have to call me and voice verify that I approve a domain name being moved out of my account for any reason. That ensures that my company’s domain name assets are being kept safe.

I also have quite a few domains at Uniregistry and enjoy their two-factor authentication and their up-to-date and user-friendly interface.

I highly recommend that entrepreneurs keep their domain names at a registrar that focuses on domain names, rather than a company that is focused on hosting. You can always point your DNS anywhere you want, but when you decide to change hosting platforms, which inevitably happens, you’ll be glad you have a separation between the two so there’s less confusion about who is controlling what.