Graham co-founded Y Combinator in 2005, and early articles repeatedly noted that founders spend time on decisions unrelated to their companies. Domain name negotiations are one such example. The standard practice for incubators is to launch first and rename later, rather than to buy category words upfront. Dropbox, Stripe, and Airbnb did not directly register words from the dictionary.

This statement is not accompanied by investment. Resources are redirected to naming searches rather than domain brokerage. The motivation is that the price of a .com word is often higher than what can be justified by seed round funding, and users enter through app stores, links, and word-of-mouth, not by guessing domain names. Defining 'that.com' as an unfinished list allows founders to exit the negotiation with a single seller.

A similar situation occurs when category words in trademark registrations are occupied, prompting companies to use coined words instead. It is also similar to how short domain names were hoarded after 2000, while usage shifted to in-app searches. The industry position is not in the expansion of domain trading. Transactions still occur, but he shifts the decision-making power back to the founders' vocabulary from the holders.

Structurally, this is a transfer of pricing power. The reason a single string is expensive is that the buyer believes there are no alternatives. He states that alternatives are simply spellings that have yet to be thought of. The reason this happens is that registries allow for infinitely close new strings, while users remember the company, not the suffix. Once negotiations are defined as unfinished thoughts, the asking price from domain holders loses its uniqueness.

ABAB News · Law of Cognition

The only choice is often just a result of searching too early
Strings can be infinitely close, but memory only retains the company
The seller's asking price is predicated on the buyer's belief that there are no alternatives