Domain Mistakes Founders Make: Why OpenAI’s $15.5M Chat.com Purchase Actually Makes Sense

I’ve been buying and selling domain names long enough that I’ve stopped being impressed by headlines.

I’ve seen this cycle repeat more times than I can count.
The Chinese rush.
The .io phase.
The crypto land grab.
Now the AI gold rush.

So when OpenAI bought Chat.com for $15.5 million last November, I didn’t gasp. I didn’t tweet. I didn’t rush to explain it to anyone.

I’d seen this movie before. Most of the reactions that followed are rooted in the same domain mistakes founders make every cycle.

What has surprised me is watching how founders reacted to that purchase afterward. The conclusions they drew. The things they latched onto. The things they completely missed.

Most of you looked at that number and had one of two reactions.

Either:
“That’s insane. Total bubble behavior.”

Or:
“I need to find the next Chat.com.”

Both reactions are wrong. For different reasons. These assumptions sit at the center of the domain mistakes founders make when they evaluate names purely through cost or traffic.

And both lead founders to make the same expensive mistake, usually disguised as being “lean.”

The first question founders always ask me when Chat.com comes up is about traffic.

“How much traffic does it get?”

That question tells me everything I need to know about how they’re thinking.

Because traffic has almost nothing to do with why that domain was worth $15.5 million. This misunderstanding is one of the most persistent domain mistakes founders make, especially early on.

I bought a domain in 2012 for about $8,000. It barely got any visitors. Fifty a month, maybe. Five years later, I sold it for $45,000. Traffic didn’t change. The market did.

Chat.com isn’t valuable because people type it into a browser.

It’s valuable because when people think “chat,” OpenAI now owns that mental territory.

Not ChatGPT.
Not conversational AI.
Just chat.

That’s not marketing. That’s infrastructure.

For a long time, startups treated domains as a line item. Something you minimize. Something you revisit later. It sat next to ad spend and landing page experiments.

Then something shifted.

Around 2023, founders stopped building “products on the internet” and started building the internet itself. AI interfaces. Default tools. Primary layers.

When your entire business lives on a screen, the address stops being cosmetic.

Rocket.com selling for $15M.
Icon.com at $12M.
Chat.com at $15.5M.

These aren’t vanity buys. These are balance-sheet decisions made by people who understand that in winner-take-most markets, owning the category is cheaper than renting attention forever.

I spend a lot of time talking to Series A and B founders about naming and domains. And I keep having the same conversation, almost word for word.

They’ll tell me they found the perfect domain, but the owner wants $60K, $80K, $100K.

“That feels crazy,” they say. “We’re trying to stay lean.”

So I ask them what they spent on AWS last year.

Usually it’s more.

Then I ask them what valuation they’re raising at.

Usually it’s tens of millions.

And that’s where the conversation gets quiet.

Because suddenly the math looks strange.

They’re happy to burn hundreds of thousands on compute that depreciates to zero, but hesitate to spend a fraction of that on an asset that protects the entire company’s identity.

This is where founders get stuck in the wrong mental model.

The domain isn’t the expense.
The wrong domain is.

This is where many domain mistakes founders make quietly compound into long-term drag.

I learned this the hard way. In 2017, I advised a startup to save money and stick with a “TryName.com” domain. It seemed sensible at the time. They were early. Capital mattered.

“Upgrade later,” I said.

By the time later came, the company had customers, press, and a recognizable name. The owner of the exact-match domain had seen all of it.

The price jumped from $15K to $400K.

They paid it. They had no choice.

This pattern is common in the domain mistakes founders make by delaying decisions they assume can be revisited cheaply.

What they don’t tell you is what that decision really cost. Six months of negotiation. Months of brand confusion. Internal debates. Sales friction. Explaining email addresses. Explaining URLs.

That $400K domain probably cost them a couple million in momentum.

And that’s the part founders never model.

Domain mistakes don’t show up as losses. They show up as drag.

So no, I’m not saying every startup should overspend early. I’ve seen founders torch 20 percent of a seed round on a name before they had a real product. That’s not strategy. That’s ego.

But there is a right way to think about this, and it depends entirely on stage.

If you’re pre-seed or seed, your job is speed. Not perfection. Get something clean, pronounceable, and non-embarrassing. Use a modifier if you have to. Cap your spend. Move on.

What you should not do is negotiate for months to save a few thousand dollars. I’ve seen founders lose entire markets while arguing over domain prices.

Series A is where things change.

By then, people are saying your name out loud. In meetings. In intros. At conferences. If you’re still on a workaround domain, you’re paying a credibility tax every single time.

A $50K domain amortized over a few years is nothing at that stage. The trust it buys you compounds faster than most marketing channels ever will.

And once you’re Series B or beyond, this stops being optional. If you’re building a real company and don’t own the core digital territory for your brand or category, you’re not being scrappy. You’re being careless.

Which brings me to the $15K trap.

$15K is a dangerous number.

It’s enough to buy something mediocre. A clunky compound word. A trendy extension that won’t age well. A name that feels clever today and dated tomorrow.

But it’s not enough to buy something that truly appreciates or defends you.

Founders will happily spend more than that on a single conference booth or a marketing experiment they’ll forget in six months. But spending it on a domain feels permanent, so they hesitate.

That hesitation is what makes it expensive.

Domains aren’t ads. They’re real estate. History shows that most domain mistakes founders make come from treating long-term assets like short-term experiments. And in two decades of watching this market, I’ve never seen prime real estate get cheaper.

If you’re uncomfortable reading this because you know you’re on a compromise domain, don’t panic-buy. That’s how people get ripped off.

Map your upgrade path. Identify the target. Open the conversation early. Time is leverage in domain negotiations, until suddenly it isn’t.

And when you talk to your board, don’t frame this as marketing. That’s a losing argument. Frame it as asset protection. Enterprise value defense. Strategic infrastructure.

That’s what OpenAI understood.

They didn’t buy Chat.com because it was flashy. They bought it because in a world where AI becomes the interface, owning the verb is power.

You’re probably not building OpenAI.

But you are building something.

And sooner or later, you’ll have to decide whether you want to own your space or keep renting it.

Because I can tell you from watching this cycle repeat again and again: founders who delay this decision always pay more later. Some founders first surface these issues through valuation and risk analysis at DomainVerdict, while others approach them as long-term portfolio and category strategy via DomainInnovate.

Sometimes in cash.
Sometimes in credibility.
Often in lost momentum.

Your $15K domain budget isn’t lean.

It’s just deferred pain.

I now work on the buyer side of domain acquisitions, helping founders navigate these decisions discreetly at buyeraxis.com

Complimentary Risk & Valuation Assessment

Are you building equity or just renting space?

Most founders don’t realize their domain is suppressing their valuation until they sit down with an acquirer. Don’t let that happen to you.

I am offering a Complimentary Risk & Valuation Assessment for founders. I will review your current domain portfolio and analyze it against your target valuation goals.

In this audit, we will uncover:

• The Valuation Gap: How much is your current domain dragging down your multiple?

• The Traffic Leak Score: Is your current domain leaking traffic to competitors?

• The Upgrade Path: A strategic roadmap to acquire the asset that secures your legacy.

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