What makes this story interesting, is the domain HotPotato.com was for sale at the TRAFFIC auction in Orlando in May 2008 with a reserve price of $10k-$25K.
The domain which at that point was a developed site, did not sell reaching a high bid of $17,500
(You should check out this YouTube Video of Kevin Wood who owned the domain HotPotato.com which was for sale at that TRAFFIC Show talking about the domain and its potential).
The domain obviously sold shortly thereafter probably around the higher end of the reserve range of $25K.
The site, Hotpotato.com just went live last November as well as their popular location based app which is something along the lines of Four Squared.
The site already received $1.4 million in financing last year.
Just to show you you just need a short memorable domain and a great development idea to hit it BIG.
From a low five figure domain purchase to an 8 figure sale in less than a couple of years, in the worst economy in 70 years, that’s pretty impressive stuff.
This is from the Hotpotato.com blog:
“””
It’s been an exciting year at Hot Potato. Since going live last November, we’ve been inspired and energized by your reaction to the service and people’s appetite for socializing around activities and live events.
Today, we’re thrilled to announce that some of the features and thinking behind Hot Potato are going to be exposed to a much larger audience: We’ve been acquired by Facebook.
This wasn’t an easy decision, especially since we’ve built up a base of dedicated users. If Hot Potato was going to sell to anyone, Facebook was the natural choice. Facebook is still small, moves fast, provides a great supportive environment for people to be entrepreneurial, and most importantly, Facebook builds great products. We’re looking forward to joining their team.
We’ll soon be wrapping up operations at Hot Potato. We will no longer be accepting new user registrations, and we will be offering existing users a way to download their information from the site. To do this, go to: http://hotpotato.com/dashboard/history. In about a month, Hot Potato will close up shop and delete all user data. No user data or account information will be kept by Facebook. We will be sure to keep you posted on this process over the next few weeks.
Finally, we just want to say a big thank you — and give a big spuddie hug! — to all of you for sharing your events on Hot Potato and sending us thoughtful feedback that pushed us to think harder. It’s been real, friendos!
— The Hot Potato Team”””
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Wow, That’s awesome. The site according to compete.com only gets around 40K uniques a month. Goes to show that a great idea is worth good money.
Lots of money to be made out there still.
hard to evaluate the value of the DOMAIN NAME in this selling
WQ, the site might only get 40k uniques a month but most people use it through their iphone app not the website. also, i read that facebook mainly bought them out as a talent aquisition. they probably dont care about their site or the app, they know that those engineers that built it have the skills to help them with the new facebook places.
Wow, but what are they buying, the development, the name, … because apparently they are not buying the membership (did they need it?)
In a side note, I found funny this snippet in their PR:
“… Facebook is still small…”
Hummm… Well, all is relative.
especially since we’ve built up a base of dedicated users”
That’s key to the big bucks”
OF
Amen!
when I will sell a domain and/or a website at this price, I will have enough money to fund nearly all my projects… 🙂
Owen it does not seem this acquisition was about that. They are deleting all user data, so nothing to be gained by Facebook in that area.
Throwingg lots of money at it can make a difference. I am bringing into focus: “The site already received $1.4 million in financing last year.”
Would it really matter that the domain was hotpotato, with a large cash injection(s) it could have been named stringandcup.
Josh
But the point is if the site was called stringandcup.com, and not a catchy domain like hotpotato.com would anyone have invested in the first place?
Any reasonable name would do. Out of millions listed for sal one can pick up a better name for few thousand dollars. “We’ve been acquired by Facebook.” The buyer has a proof of concept, and a capable team. It is just an acquisition that makes sense.
“.. Facebook has been on the prowl for talent acquisition targets recently. In particular they’re supposedly looking to bulk up the mobile side of things, we’ve heard. This Hot Potato deal could fulfill either of those — or both.. Hot Potato is a location-based service.. But again, this would seem to be a pure talent buy. If the deal is finalized, you can probably expect Hot Potato, the service, to be shut down at some point in the future.”
=nothing to do with the domain name or user base really.
I’ve decided… monday I’ll go buy a ton of potatoes… I will cook them in my owen until they become VERY hot… then, I will send a mail to Facebook…! 🙂
That clearly shows that you do not need generic domains—I knew it long ago that generic domains are over-rated.
Get some hot catchy domains….like….my name.
HotPotato.com is a brandable name .. they could have called it FunkyMoney.com, SexyMama.com .. doesnt matter.
Sure the name is catchy but thats all you are paying for with a brandable name. The rest of the value is the company’s business plan and how they plan to use it – not a whole lot of value to the name if its just parked.
however, the HotPotato.com domain name always is better than names like toou, gyynu, wuooso, pueeqo, yuloni, biscudoc, etc.
imagine its ads: “hey, what do you want boy?” “an HotPotato, of course”! 🙂 🙂 🙂
(but I don’t know if, in America, the “hot potato” or the “small potato” have the same “alternate meaning” than in Italy…)
I wonder if facebook wants to buy SourCream.com and GratedCheese.com to go with their HotPotato.com?
And once they have all those, they could buy EatYourFace.com
Just some food for thought!!!
@MHB, I see what you are saying the name Jotpotato may have got it the second look for development but highly unlikely. I would more so lean toward it being the individual and his idea, the name was just a little lipstick, dont look cheap.
The author knows his stuff. They paid for a business but the catchy name without a doubt contributed to the success of the business.
HotPotato and even FunkyMunky & SexyMama are example of good catchy names. Why? Because unlike names people like to throw around as catchy that I’d forget in about 5 seconds, these are terms millions of people have been familiar with their whole lives and will “sink in”. $25,000+ is a fair price for any name of that sort.
@ :::: just registered google-film.com google-themovie.com google-thefilm.com ! ::::
(aka :::::::::: the Google movie coming soon ::::::::::)
are you high on drugs, son?
@MHB cant understand why you’d let this person comment four times with their bullshit spam in the same post and soil the integrity of your blog like that
i know its probably a lot of work to keep up with as many blog posts/comments as you do, just sayin
The company would have received funding with any good name. It’s not hard to find a good brandable name.
The business proposal probably sealed the deal. Anyone on this board can build a successful company. You just need to develop a good plan. Pick an area that will make good use of your strengths.
Thanks for sharing article.
Well, if none of you have noticed, Facebook is as power hungry for info like Google is and if any of you went to HotPotato.com to learn what they’re all about, you’d soon find out why Facebook bought them. Not that they’re competitors, but more or less that they’re a powerful tool which “could” of been bought by twitter or any other social platform out there. Looking at HotPotato’s stats, they seemed to of been growing pretty steady since launch. Facebook made a smart move and took over before another competitor could.
Im sure they just wanted the business,wow the owner of hotpotato hit the jackpot.