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I would be dubious about joining a company that spent its first million of investment on a domain name.

Some domains are truly worth $1 million. If the guy has plenty of additional money to invest, why would it matter? A really great domain can increase your chances of success.

Most successful startups I can think of (Mint, Dropbox, Facebook, Twitter) who bought expensive domain names did it well after they had traction.

Mint.com was purchased during their Series A, well before any traction.

It's also the only domain of those four that had significant inherent value. They could have easily resold Mint.com for a profit. Buying it early gave them the benefits of the great domain and lowered the price they paid. I think what Mint did was brilliant.

The only reason I can think of not to buy a $1M asset for $1M is if it eats into your runway. If it doesn't then you're better off if you can.

I stand corrected.

It's not necessarily a mistake to spend a million on a domain. What's alarming is when it's the first thing you do.

PG: What do you think of the equity offered?

I agree with the other commenters that it's an employee amount of equity rather than a cofounder amount. I don't know enough to say whether it's a good deal or not; that depends on the company. But what little we're told doesn't sound encouraging.

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