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Why choose a ".co" instead of an entirely different name or TLD? Isn't .co quiet confusing? I think its a bad name inspite of the fact that most people come to you via a search engine.
The .com would probably cost them 20x more. Not worth the price, especially for a startup.
Because it doesn't really matter anymore, it seems. Lots of established sites are on alternative TLDs now or at least began on them. I imagine the number of people who type in full domains to access a site each time nowadays without autocomplete coming up is very low.
I think "it doesn't really matter anymore" is right on the money.

.co as a TLD was essentially built around tech companies and directly marketed to them.

Plus if we're honest - most of the time people Google for companies websites that don't autocomplete in their address bar...

As an OTT example: If I want to come to Hacker News I type HN into Google and its the top result. I type two letters and click one link vs typing 'news.ycombinator.com' (typing 'news' for me brings the BBC). If a startup has put thought into their branding then a full web address isn't needed to find them. For that reason .co isn't confusing to most web users these days.