TechCrunch.com just covered the story of how the tech company Klout obtained the domain name Klout.com for $5,000 cash.
And when they say cash, they mean cash in an envelope.
According to CrunchBase, Klout has received $40 million in funding so far.
Prior to obtaining the .com domain, the company used Klout.net for it’s site.
Click here to read the entire story.
Not only did somebody leave a bunch of money on the table, but if they thought about not reporting the cash, better think twice and then some. My condolences to the seller.
my congratulations to the seller for selling at a fair price.
“…but if they thought about not reporting the cash, better think twice and then some. ”
Rick, it’s not clear if you are referring to the Buyer or Seller.
If you meant the Seller, according to the story the Seller was sort of ambushed in a restaurant with the cash offered in exchange for the domain.
It’s not like he said, “I’ll sell you the domain but you have to pay
in cash”.
Rick’s “condolences to the seller” is right.
Rick–just for comparison, what’s the least you would have taken had it been your domain? 50k? 100k? More?
Sounds like Domainer Stalking.
“Klout has received $40 million in funding so far.”
… and the klout.com’s former owner, still bangs his head on the wall of the restaurant … 40 million times … 🙂
“50k? 100k? More?”
the simple fact that this story is reported by several blog, pushes the domain value in the $xxx,xxx range!
Interesting, just checked whois and appears the former owner must have really had a weak moment because according to records his $1.6M house at the time (He sold for $1.29M a year ago) with incredible views etc must have needed a new tub.
I often wonder what motivates people to accept certain numbers…just as many stories of guys in $80k middle of Ohio homes turning down $100k so..goes both ways.
This is why Brands-and-Jingles is placing jingly domain names into start-ups in exchange for a small equity. No cash in the envelope, pure venture capitalisation.
If they just raise 40m they arent a “40m” company, but value much higher.
forgive me for nit picking but…
The company is valued much higher than $40mil. That’s the level of funding they have taken, but the actual valuation is likely no less than double that. But of course that’s just a guess.
The amount of funding a company has taken is not the value of the company in a market such as the one we are in, especially if that company is on a lot of peoples “watch” list, as Klout certainly is.
as you were…
Eyeroll at Josh
The house someone lives in or the car they drive tells 1/4 of the story at most.
I do OK and live in a VERY modest home, know plenty of people who do the same, also know plenty who live in houses they can’t afford, burn cash on driving ‘high-status’ cars, etc yet couldn’t get liquid to 10,000 dollars if their kid was being held for ransom. So they guy lived in a million dollar house? That only lets us approximate his mortgage. Tells us absolutely nothing else about his financial situation. When I was 19, I had a job bussing tables at a restaurant while going to college. I got the job because the owner- who owned 3 of them- rented an apartment in the same building (but his was a 3 bedroom and mine was only a 1 bedroom lol)
Some people prefer putting money in the bank over spending it all on maintaining an ‘image’, but I agree that this guy should’ve known that 5K was too low. When you’re being pestered about a domain to the point of someone having a sit-down about it, that’s a pretty big “sign”.
maybe, this story has been “planned” for viral marketing …
Josh that is kinda creepy
From the article –
“For the next year and a half, Fernandez harassed the owner every week to try and convince him to sell the domain name. Then, in August 2009, Fernandez decided to move the company from NYC to San Francisco. Around that time, Klout also raised its first round of seed funding: a check from angel investor Nova Spivack, which Fernandez cashed, keeping the cash in his apartment. Much to the dismay of his team and hosting company, he tells me.
Next, Fernandez started following the owner of klout.com on Twitter, waiting for him to reveal his location. When the guy at one point tweeted that he was at a restaurant in San Francisco, Fernandez went there, threw an envelope with $5,000 in cash on the table and told him that he would stop bothering him if he finally agreed to sell the domain name in exchange for the money.”
I don’t think that is really something to applaud.
Fernandez admits to harassing the domain owner.
On top of that he stalked him and followed him to a restaurant.
He made an offer, in cash, saying he would not quit harassing him until he sold the domain.
If I was the domain owner, at that point I would have contacted a lawyer. This behavior is not acceptable.
It a very sleazy way to do business, and I would not want anything to do with this company.
Brad
I kind of admire his pluck, but I agree that seems very harassment’ish.
If I were in that sellers shoes and someone who’d been harassing me with emails and phone calls showed up at a restaurant to harass me some more, I’d have pounded him the fuck out, right there over the dinner rolls.
He’s either very brave to be acting like that, or he’s a punk bully who sensed he could intimidate the poor guy. Either way, people like that will inevitably pull their stunts with the wrong person one day and wind up needing plastic surgery.
After that sequence of events, if anyone still has any questions about the draw of dot com they need to have a re-think.
now that he has demonstrated to be a cunning and ruthless guy, he should demonstrate to be also generous, giving further $ 50,000 (as a gift) to the former owner of the domain
Q: what is the advantage for him of doing this?
A: another worldwide round of blogs’ posts, that equals to a free advertising with a value at least ten times higher!
Ron
“”The company is valued much higher than $40mil. That’s the level of funding they have taken, but the actual valuation is likely no less than double that. But of course that’s just a guess.””
Ron I will agree with you but it makes for a VERY long headline
@Greg, creepy is such a strong word, I prefer “informed”. Knowing is half the battle!
@Brad
The buyer actually stalked the seller like that? LOL If someone tried that while I was eating dinner at at restaurant the reaction would have been so umpleasant he would have never attempted it again 🙂
Is it possible they gave the seller more money lately to go along with a story such as this?
It’s always fun to second guess someone’s sale price.
I’m curious how much people think they should have sold it for or specifically for Rick, how much money do you think they left on the table ?
what a creepy company. they scrape social networks to identify potential shills for major advertisers.
in their parlance, “influencers”.
say something good about a company and get others to do something that benefits the company and the company gives some perk to you for being an “influencer”. you can be an unpaid saleperson.
given this sort of mindset, the tactics of “influence” they used to acquire the domain name are no surprise.
you can take any of the names of the people behind this company, attach “sucks.com” to the end and the name is available. maybe they’ll want to buy it from you.
with these sort of stupid startups, a decent domain name is probably worth more than the company itself. we’ve seen this before. getting funding from tech millionaires who made ther money through hype and now need to spend it somewhere (they like to gamble) does not equal “worth”. show me the income statements.
but these “brilliant entrepreneurs” refuse to acknowledge this hard reality. this was probably a major victory for whomever bought the name. why would they care so much about a .com? .net works just fine. in the long run, this purchase will be an even greater victory as they surely resell it for more than 5K. if their startup fails. what are the chances of that?
@ Adam S
Given the circumstances involved here- the fact that a basic google search would’ve told him that the buyer was behind Klout.net and that same guy was so hysterical to own it to the point of physically hunting him down- I think it’s safe to say he left a shitload of money on the table.
It’s not like it was some random Sedo listing that wound up going to a mega end user without the seller knowing who he was dealing with.
There’s no telling how much someone’s really willing to pay and we can lose a ton of sales (and a ton of money) by holding out for the grand slam every time, but this one was Barry Bonds at the plate with the bases loaded taking a 50 mph pitch right down the middle… and choosing to bunt.
Rick Schwartz
”
Not only did somebody leave a bunch of money on the table, but if they thought about not reporting the cash, better think twice and then some. My condolences to the seller.
”
Trust Rick to think of not reporting the cash.
Crunchbase has a nice profile and timeline, the first seven figure investment is shown in mid 2010:
http://www.crunchbase.com/company/klout
This is Monday morning QB at it’s finest. At the time of the domain sale Klout.net only had seed money and sure the seller could have held out for more, but how many start ups fail too?
Shoulda, coulda, woulda…
If Klout.com sold from afternic last week nobody would say “boo”
That’s really low price.. Congratulation to the buyer
@LS morgan LOL nah I think this was the skinny kid back in the 1970s that became the Barry Bonds you know today. As BFitz points out they weren’t “juiced”/funded then like now, likely just seed funded.
This is a shot from right after they got the domain and note the big investors aren’t listed, who knows what was there or what the seller knew. . . it took a year or so before they got a big round even http://web.archive.org/web/20091123071149/http://klout.com/about/
I’ll go out on a limb and say they should have stuck with their price, but we have no idea what situation that seller was in when he “bunted” or if the buyer would have balked and gone another direction once he took some VC $ . It’s all 20/20 in hindsight. . . . sellers remorse is the worst of course.
@berkens where’d you get the $40m number. On crunchbase I only saw $10m
You don’t pay $50 for a bottle of sprite, just because you are rich.
Fair price. Seller should be happy he sold that name for 5k.
“should be happy”
I doubt he’s happy 🙂
I’ve turned down 3x offers for klot dot com
The buyer’s ‘harassing’ method would definitely need to be studied further.
Happy Halloween.
“You don’t pay $50 for a bottle of sprite, just because you are rich.”
Algis Skara,
That’s not an appropriate comparison.
You wouldn’t “pay $50 for a bottle of sprite” because you can buy Sprite in many places for just a dollar or so.
There are lots of bottles of Sprite but there’s only one Klout.com.
If there was only one bottle of Sprite left in the world, the Seller would have every right to sell it at any price he wants.
And that price would in all likelihood be at a premium to reflect the scarcity and desirability of that lone bottle.
“If there was only one bottle of Sprite left in the world, the Seller would have every right to sell it at any price he wants. ”
A Sprite monopoly doesn’t matter because other drinks quench thirst just as effectively.
Domain names are sufficiently unique that perhaps there is a monopoly of greater concern. Seller may benefit not just from the basic desirability of a given name, but also from the effort that buyer has put in to producing an idea, or prior development under that name.
Nice domain with some branding k(c) lout
I wonder why he’s not pointing klout.net to the .com?
If Rick Schwartz owned that domain he would have sat on it with a parked page for years until the owner paid him a huge amount for it.
Because he would know that even though there was only one person or company in the world that valued their name, they would have eventually shown him the money, just like he did with punchbowl.com.
If folks would just slow down instead of selling domains like there was a fire in their house, they would KNOW a 7 figure deal when they saw one. Is the domain worth that? No. But the DESIRE is!