The Ethics of Buying Domains from Dead Startups: A Post-Mortem

What exactly are we talking about here?

You find a dead startup's domain on auction. The company raised $2 million in 2021, built a SaaS for dog walkers, and then died quietly in 2023. The domain is now listed for $9 on dead.domains. You buy it. Feels weird, right?

It is weird. But it is also normal. Domain investing has been around since 1995. The ethics of buying domains from failed startups is a newer question because startups die faster now. Crunchbase says 90% of startups fail. That is a lot of domains.

Is it ethical to profit from someone else's failure?

Yes, mostly. The startup failed. The domain expired. The founder did not renew it. You are not causing the failure by buying the domain. You are just picking up the corpse.

I have bought a dead domain myself. It was a project management tool that died in 2018. I paid $12. I felt guilty for exactly one day. Then I realized the founder had moved on to a new startup. They did not care about the old domain. They probably forgot it existed.

But there is a line. If the founder is actively trying to sell the domain for a fair price, do not snipe it for $9. That is rude. Wait for it to expire naturally.

What if the domain still has traffic or brand value?

This is the tricky part. Some dead startups still get 500 visits per month from old blog posts or backlinks. If you buy the domain and redirect it to your competitor's site, that feels skeezy.

But if you buy it and keep the content up, or redirect it to a useful resource, that is fine. The traffic was going to disappear anyway. Google will eventually drop the ranking. You are just slowing the decay.

One buyer on dead.domains bought a domain from a dead food delivery startup. He kept the old blog posts live. He added a note saying the company was dead. That is the right move.

Does the founder have a moral claim on the domain after death?

Legally, no. Once the domain expires, it is public property. The founder had 30 to 60 days after expiration to renew. If they did not, they lost it.

Morally, it depends. If the startup died last week and the domain just expired, maybe wait a month. Give the founder time to grieve. But if it has been dead for two years, the domain is fair game.

I once saw a founder tweet angrily about someone buying his dead startup's domain for $9. He said it was disrespectful. But he had let it expire for six months. You cannot claim ownership of something you abandoned.

What about domains with sensitive data or user information?

This is a hard no. If the domain still has active user accounts, emails, or personal data, do not buy it. That is unethical and probably illegal. GDPR and CCPA exist for a reason.

Check the domain before buying. Use the Wayback Machine to see what was on it. If it was a health app or a financial tool, skip it. The risk is not worth $9.

How do you know if a domain is ethically safe to buy?

Here is my rule of thumb: if the startup died more than 12 months ago, and the domain has no active user content, buy it. If it died less than 12 months ago, wait or check if the founder is selling it elsewhere.

The ethics of buying domains from failed startups comes down to intent. Are you buying it to build something useful, or to squat on it and ask for $5,000 later? Squatting is gross. Building is fine.

What is the worst case scenario?

You buy a domain from a dead startup. The founder sees your site and emails you angry. They say you stole their brand. You explain that you bought it from an expired auction. They threaten to sue. They cannot win, but it is annoying.

Or you buy a domain that had a trademark. The trademark owner sends a cease and desist. You lose the domain and the $9. That happened to a friend of mine who bought a domain from a dead crypto startup. The trademark was still active.

Check trademarks before buying. The USPTO database is free. Use it.

Check out browse the graveyard. It is a marketplace specifically for dead project domains. You can also check expired domain lists, but dead.domains curates the ones from actual startups. If you have a dead project, you can bury your dead project there too.