You should never spend $825K on a domain – but here’s why I’m glad I did

The author makes it sound like cover.com is a super intuitive domain name for an insurance company... personally if I heard 'cover' outside of the context of this article I would not have made that connection at all. He does a pretty bad job of justifying a pretty bad decision, in my opinion.

For nearly a million bucks you can build a brand on its own domain.

This is just an article trying to justify bad decisions in hindsight.

If you cant find a smarter way to spend a million dollars than buying a flashy .com then I would seriously question the entire business.

The proof is in the pudding. Get back to me when you're either profitable or bankrupt, and we can ask whether this was a good decision or not.

Sounding in here - I bought the domain. Let's start with it was a lot of money, and to the credit of some of the folks here it remains to be seen whether or not the purchase was prescient or not from a ROI perspective. Whichever way it goes, the purchase won't be the reason that we succeed, or fail. Reasons for the purchase are enumerated in the article, but more than anything else, we're in the trust business and our customers cross-reference our web presence before spending thousands of dollars with us via our apps. Insurance is a business with consumer scale, and best in class SaaS-like economics (very low churn, predictable CF) - in this context, we became more comfortable pulling the trigger.

Reading between the lines, they had an existing app with some name recognition, probably following a bunch of advertising spend for that brand.

The mistake they made was not bothering to choose a branding friendly name at the earliest stage. But they made their bed and this is them lieing in it.

The fact this required reading between the lines shows this is a terribly written article.

I'm not a branding guy but covered.com seems like it would have been a more intuitive choice (and seems undeveloped).

With all the new generic top-level domains out there like .biz .blog .pro even .ooo (a personal favorite lol), and a whole bunch more coming out next year, I'm surprised there's still a mad gold rush for .com domains. I was just telling my kids how domain squatting was a thing back in the 90's and early 2000's, but I guess I stand corrected.

https://en.wikipedia.org/wiki/List_of_Internet_top-level_dom...

This article is literally an advertisement, there is nothing interesting about the story at all.

The final pre-commission price here is normal range for a short, common-word dot-com bought by a motivated buyer from an unmotivated seller. It's fine. Above $1M is crazy though; I think the brokers were softening them up.

We paid much, much less for https://fauna.com/ during our seed stage and rolled up all associated domains along the way cheaply, but we were also willing to change the brand if necessary, and had done some investigation as to the "acquirability" of the domain when we were just starting out.

I question the use of multiple brokers, though, that seems needlessly expensive and guarantees that the negotiation will be hardball because no relationships can be built.

This might have been dumb but I run a digital agency. Use to write code myself. Don’t anymore (saying this so no one flames me for not being a dev!!)

Insurance is one of the stickiest industries. Churn is almost ALWAYS net negative. Referrals are HUGE and grow a biz that does no marketing whatsoever.

Just engaged with an insurance company for a project and saw some insight into their numbers. Blew my mind. Software biz with similar renewals + low cost per customer + profit margins would be very, very, very valuable.

So much money on a domain sounds outrageous. But even small insurance companies are generating $1mil in cash a year. With no risk of losing it (really-there’s always risk).

Amortizing this out with the (possible) benefits might make it a sticker shock worthy of doing.

This may be irrelevant but I'm curious why he chose a picture of himself to be at the top of his article? Seems completely irrelevant to the story but makes me wonder about him.

I was immediately reminded of "color.com", the social network that bought the domain for $350,000. I remember that people thought that was preposterous at the time[1]. I'm not sure that $825,000 for cover.com a few years later makes a lot more sense. At least I hope for them that they'll be more successful than Color.

By the way I just checked and color.com seems to now belong to a genetic testing company, I wonder how much they paid for the domain, maybe the color.com app made a good investment in the end.

[1] https://techcrunch.com/2011/03/24/color-com-was-acquired-for...

It's definitely too early for them to declare victory on justifying the $825M domain purchase.

I wonder if this is a pattern for them to celebrate the vanity milestones - I also noticed another medium post about the $27M they raised that "puts us in a strong position to fundamentally change the insurance industry".

https://medium.com/@coverinsurance/i-raised-27m-in-two-years...

Changing the insurance industry is a huge task and $27M is a drop in the bucket - if I were there investor I'd hope to see their medium articles focus more on real progress they are making to change the industry.

Does it have to be .com? Actually, when I wanted a short .com domain for my project which was sort of a frontend for an S3 bucket I went to https://www.expireddomains.net and found that it was a great resource of short domain names! I don't remember exactly how long I was watching it waiting for a name I'd like, but it wasn't really long, maybe 7-10 days and my wait was rewarded with the name s3io.com, which, I think, was something I couldn't even dream of – 4 chars long and pretty much relevant! There's a Russian saying "It's the man who makes a name, not vice versa".

So spending $825k on a domain "has translated into sales". Great. What kind of sales? It's telling that all the supposed benefits here are really vague.

Maybe they could have paid someone to come up with a domain name that doesn't cost $825k.

A competitor of this business is compare.com: https://www.compare.com/

compare and cover seem similar. Both are short, common names that begins with a 'c'

This is one case where cover.me makes much more sense. I suspect within the next half generation or so the 'only. com' is for real business will be over.

I am selling Pacemakers.com for 75K and its worth every penny if not more. Dot COM is king and the marketing value and name recognition is worth every bit you pay. If you want to start a new business do you want a name like Pacemakers.com that is recognized worldwide and easy to remember or do you want your clients and customers searching for you buried on Google - pace-makers.gg ?

Some serious confirmation bias in this article.

Reading the comments I wasn't the only one thinking WTF did I just read.

He tries to justify without anything tangible. Well the company is built on intangible things anyway.

I absolutely love the beating this article is taking here in the HN comments.

insurely.com is available.