Tasting and Front Running On My Domain & A Letter From "Will Malone"

I am fired up, and I am hoping you can help me shed some light on a particular topic in the domain space. This continues my conversations on exploitation and the boundaries of profiting from someone else's ideas. And it is a barrier to entry that is affecting us all, small businesses and tech startups alike, and I think that this challenge is only going to get more powerful.

My first lesson in domain purchasing came in 2003 when I purchased TheSecretIngredients.com for my first tech startup. I would have loved the more attractive SecretIngredients.com, but the domain squatter sitting on the domain wanted many thousands for the name. I did not have the budget for that, and I could understand why he was holding out for that price tag. The name has potential to attract a large corporate buyer.

Running a customer service email account on a domain consisting of the word "Secret" did not prove to be effective. I learned early on that spam filters were gobbling up emails to my customers. Customer service was key to my business model, and so I established HeirloomCookbook.com and routed mail through the new domain for communication. It worked well.

After closing Secret Ingredients, I let HeirloomCookbook.com expire. And that was stupid. Domain companies jump on expired domains (especially those that have received publicity), throw up some ads, and start making money immediately. And that's exactly what happened minutes after the name expired.

Flash forward to 2009. Secret Ingredients is closed, and I have to figure out what to do with myself. I play with several business concepts and start buying some domains. It was much more difficult to come up with brandable business names that had .com availability, and it pushed my ability to get creative with naming.

My system for purchasing domains has always been the same. I go to NetworkSolutions to check availability, think about it for an hour or day, and then go to one of my preferred registrars and get the domains. I have never had a problem with this system until last week.

I have mentioned that I am preparing the launch of the "underground" business that I have been operating for about a year and a half. Brand is hugely important to me, and so domains and naming have been very well thought out. In choosing a business name, I decided to register two domains- one is the business name and the other has a different purpose. I checked Network Solutions for availability and immediately bought the business name as .com. I decided to wait a day or two to purchase the second domain.

BAD IDEA. I went to register the domain two days later, and it was gone. I panicked, talked to my team, and we decided "screw it" the .us and .net are more important to us, and we can deal with the .com later.

REALLY BAD IDEA. I did not know better.

In a meeting with my advisor Michael two days later, I admitted that I felt like I had been watched. That someone saw my domain search and bought it before I could get to it. Michael nodded his head and confirmed that these lists are sold. I went back to the office and started researching. I learned about domain front running and that domains can be purchased before you hit the Checkout button.

From Wikipedia: "Domain name front running is the practice whereby a domain name registrar uses insider information to register domains for the purpose of re-selling them or earning revenue via ads placed on the domain's landing page. By registering the domains, the registrar locks out other potential registrars from selling the domain to a customer."

And that night I got an email from Will Malone of Better Domains Bureau. I have copy and pasted the email below - removing only the domain and links to information about it:

Hi, I'm Will Malone with Better Domains Bureau. xxxxx.com will be available for purchase soon. Since you possess xxxxx.us, I think you may be interested in xxxxx.com. There is only a one time fee for the domain with a year of registration on us. You also can forward xxxxx.com to xxxxx.us at no cost.After purchasing xxxxx.com you will never be charged again by Better Domains Bureau. If you do have an interest in purchasing xxxxx.com, please visit: [removed] Once xxxxxx.com is ready for purchase, one of my account representatives will contact you. Thank you and have a great day. Better Domains Bureau 1128 Royal Palm Beach Blvd, Suite 243, Royal Palm Beach, Florida 33411 954-518-4349 (Please use code: [removed] when calling our customer support) Skype: globaldomainsellers betterdomainsbureau.com ---------------

Please learn from this story and do not check the availability of a domain until you are ready to purchase it. And click the Checkout button as fast as you can.

I understand that this is a free market, and that there are many incentives for registrars and ad vendors (especially Google) and that large profits are to be made from domain squatting. But I do not think that what happened in this scenario is right, and I want everyone to be well-informed.

I am not an expert on this, so if you are, please leave a comment and explain what is happening. If you have experiences, share them please.

And read Nathan Parcells recent blog post, "How Domain Hoarding is Killing Innovation," on Seattle 2.0. Thank you for a great post, Nathan.