Paddle's $275,000 Domain Purchase: A Risky Move that Paid Off
In 2012, we founded Paddle. Immediately we knew that we wanted a clean, brandable, one-word .com.
So we started a search, and Paddle – the .com was available for sale through a broker, so we reached out. After a few weeks of back and forth, we agreed on a price – $120,000. At this point, we hadn’t raised much money. We had just a handful of angel investors at the time and had raised $200,000.
But we felt so strongly, that a solid .com + brand name was needed. We spoke to our investors and agreed to extend our round to $320,000 to enable us to buy the domain and have the same runway. We did the usual trademark checks, etc… and they were all clear. We closed the $120,000 purchase of the domain.
I was 18 at the time. The largest purchase I’d ever made. A few weeks later, we put up a holding landing page on the domain, and announced to the world what we were working on.
At the time, we were working out of a small space in the corner of one of our investors offices. The following week, the office manager came up to us with a FedEx package.
We were excited! Our first mail! We’re a real company! We opened the package and it was a cease and desist and an intention to sue for trademark infringement for using the name “Paddle”.
What? We’d checked? It was all clear! We’d done our searches online with our lawyer a couple of days prior to completing the purchase.
Little did we know, someone had just registered the trademark for “Paddle”, a few days earlier.
At the time, it took about a week for new filings to appear online… So we got in touch… It was another seed stage startup. They were using derivatives of the name Paddle as their domain: “usepaddle” etc.
We’d just spent $120,000 on the domain, and now potentially couldn’t use it… The $120,000 we’d paid was too much money for us to just “walk away” from, but it was more money than the other company had (or was willing to spend) to buy the domain from us.
We were stuck. In an eerily similar story to @_shahedk yesterday, we realised we needed to pay the “other Paddle” to change their name.
After a few weeks of going back and forth between lawyers, we agreed… £120,000 ($155,000) for them to change their name, and assign the trademarks they’d registered to us.
So… we did it. Using the remaining $200,000 we had in the bank, we paid them and acquired the trademarks. We operated on the remaining $45,000 for a while. It was the biggest motivator to launch quickly, and get revenue coming in the door.
So that’s exactly what we did. We launched and extended our runway with revenue. Grew the business, and then a few months later, we raised a little more money in a seed extension to give us more runway. And the rest is history!
It was a stressful time, but ultimately turned out to be a great decision and we ended up building a company worth $1bn+. I’m not going to recommend anyone spends most of their money on a domain when starting a business, we young, lucky and a little stupid – but it worked!