MicroStrategy Inc. (NASDAQ: MSTR) recently sold the domain name “Voice.com” for $30 million.
The domain was purchased by a blockchain company for its new social media platform called “Voice”. The buyer “Block.One’ paid for the domain in an all cash transaction, making it one of the biggest cash domain sales of all time. This isn’t the first time a domain name has sold for an 8 figure sum. There have been multiple publicly disclosed sales including Fund.com, Insure.com, Tesla.com, and more. Senior executive VP and CMO Marge Breya of MicroStrategy gave the following statement after the sale of Voice.com:
“MicroStrategy holds more than a dozen evocative and powerful domain names. While our focus continues to be on our core analytics and mobility business, we are open to leveraging these domain names in equity or other strategic transactions with well-funded parties,”
Premium domain names like “Voice.com” are widely considered to be high value liquid assets, and play a huge part in business brand positioning. Buying the domain name you really want isn’t easy, and even with a big budget, it’s not always possible.
Here are 7 things you may not have realized about this transaction:
Block.One initially purchased Voice.io
In April 2019, only 1 month before they acquired the .com, Block.One elected to purchase Voice.io. The .io extension has been a popular domain name extension over the last few years, especially within the blockhain/crypto industry. Many blockchain and crypto based companies are electing to use .io domain names after being unable or unwilling to purchase the preferred .com extension.
Ultimately, the company decided that they needed to own the .com to achieve their aspirations in a highly competitive market. They also noted the importance of protecting themselves against losing huge amounts of traffic to the popular .com extension.
The buyer raised over $4 billion in funding through an ICO
Rather controversially Block.One raised $4 billion in May 2018, which ended up being the biggest ICO ever by a heavy margin. The catch is that they raised all that money without a product and without much explanation of how all the capital would be used. The Blockchain company offered a crypto token called EOS under the promise that those tokens would one day be useful inside a digital network. At the time, the ICO brought in over 7 million in total Ether (ETH) to fund the offering. Ethereum was trading at roughly $576 per token at that point.
The sale was brokered by GoDaddy
GoDaddy was hired to acquire the domain on behalf of their client “Block.One”. This kind of acquisition service is widely offered by many registrars and domain name brokers. Interestingly it was discovered that GoDaddy had helped Block.One with other domain acquisitions in the past, so the trust and comfort level was already established between the buyer and broker. In a scenario such as this one, that added trust and credibility likely set the foundation for such a large sale.
Both buyer and seller had to understand domain valuations.
GoDaddy have a very large portfolio of domain names that they’ve purchased on the aftermarket. Here DNW.com writes about a GoDaddy SEC filing in 2017 that references two portfolio acquisitions for $50 million. With all things considered, GoDaddy understands the true value of a business owning a premium .com domain name, and with the established credibility they had, it enabled them to transfer that knowledge to the buyer (Block.One). It’s worth noting that despite GoDaddy’s important involvement, many serious company’s do understand the inherent liquid value of quality domain names. Here is an example of some of the top domain names owned by household known businesses.
The seller also had to understand the true value of a domain like Voice.com, which brings us to the next point.
The seller owns other high value domain names
Despite the fact that MicroStrategy are mainly focused on analytics and mobility, they do own a rather impressive domain name portfolio which they claim to be available for “strategic transactions”. Some of the domains in their portfolio include: Michael.com, Emma.com, Courage.com, Speaker.com, Wisdom.com, Glory.com & more. Here is a direct quote from the landing page of Emma.com:
MicroStrategy believes in the power of digital transformation. We hold more than a dozen evocative and powerful domain names. Ultra-premium domain names like these can help a company achieve instant brand recognition, ignite a business, and massively accelerate value creation.
The deal closed in less than two months.
According to a video of Paul Nicks – VP of the Aftermarket at GoDaddy, negotiations didn’t start until mid-April for the domain name. Here is a short 5 minute clip of him discussing the sale at a domain name conference in Europe run by NamesCon. During the video he explains that the deal closed on May 30th, just 2 days prior to the buyers deadline. June 1st was the desired launch date of their social media platform making it a very tight timeline.
There are many instances where domain negotiations have lasted months, and even years. Block.One likely paid a slight premium on the domain because of that time crunch they put on themselves and GoDaddy. A tough negotiation would likely involve a certain amount of silence and disagreement from both sides, but in this particular scenario the leverage belonged firmly to the seller.
The $30 million price tag was before commission
Finally, the domain sales price was reported as being $30 million, but in reality the price paid was potentially closer to $35 million. Paul Nicks of GoDaddy confirmed in a tweet that the reported price was before commission, making the total significantly more.
The GoDaddy Domain Broker Service explains that they charge an initial fee to start the “domain buy” process and if the domain name is successfully purchased, a 20% Buyer Broker fee ($15.00 minimum fee) will be added to the domain purchase price. While it’s unlikely that a domain of this size was subject to a $6 million commission, it could still have added a substantial 7 figure sum onto the total.
Unfortunately domain sales are often kept private which leaves the general public uneducated around the true value of domain names. In this case we are fortunate to see an example of just how much value businesses place on the right .com domain name.