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REINVENTING GoDaddy — A True Story

THE LAW OF THE INSTRUMENTS

In this post, you will find a set of ground-breaking recommendations that I offered to GoDaddy — an $11B+ company. If you followed my previous chapters of the “Reinventing XXX” series — you already know that I engaged several companies from completely different industries. It was done INTENTIONALLY — to demonstrate the following:

The merit of the outside advice has nothing to do with how many years the advisor was involved within a specific industry. If you already have considerable domain-specific expertise, it’s time to start looking for outside-the-box thought-leaders. After all, the most successful companies strike the right BALANCE between:

· Domain-specific experts AND generalists

· Mile-deep AND mile-wide points of view

· Strategists AND tacticians

· Leaders AND managers, etc.

Why? Because there are significant benefits to BOTH. And only by using both types of advisers, the companies can gain from new and innovative recommendations and insights. The best turnarounds and pivots occur when CEOs take outside advice seriously.

No matter the size of your company, surrounding yourself with smart, pragmatic, honest, and extremely diversified Advisory Boards — is as important, as hiring the right employees. Otherwise, and before you know it, the “Law Of The Instruments” takes place: “To a man with a hammer, everything looks like a big nail” …

So, to REINVENT, I recommend using the following COMMON-SENSE process to solve such an Expert/Generalist dilemma:

· Generalists — use such outside advisors to reinvent old business models & generate new growth strategies

· Experts — use domain-specific experts to significantly accelerate, enhance, and optimize the revived growth strategies

· Verifiers — repeat the process when the growth flattens…

THE REINVENTION PROCESS

At the end of this post, you will find more links to my previous articles describing the REINVENTION PROCESS at Booking, Indigo, Boeing, Andrew Lloyd Weber, and Bombardier. And you will find more details about all the stages such as:

· OPM — Using Other People’s Money

· Push/Pull — Adding New & Untapped Revenue Streams

· Noncustomers — Focusing On New & Untapped Market Segments

· Business Model Innovation — As Important As Technologies Behind It

· Operating Advisor/Mentor — Hands-On Assistance With Strategy AND Execution

Consistently, I demonstrate the significant Value Innovation derived from the above Reinvention Process by focusing on one or more of its components. This article will predominately focus on Business Model Innovation linked to Innovative Loyalty Programs…

THE PAST

According to ZACS: “Based in Scottsdale, AZ, GoDaddy is an Internet domain registrar and web hosting company that also sells e-business related software and services. The company is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals, and individuals.

GoDaddy — listed on the New York Stock Exchange under the ticker “GDDY” — went public on Apr 2, 2015. The company priced its initial offering at $20 a share. GoDaddy reported revenues of $2.99 billion in 2019, up 12.7% year over year. The company generates revenues from three segments — Domains (45% of revenues), Hosting, and Presence Offerings (38%) and Business Applications (17%).

Domain revenues mainly consist of sale of domain name registration subscriptions, domain add-ons and aftermarket sales. Hosting and presence revenues principally consist of subscription sales to their website hosting products, website building products and SSL certificates. Business applications revenues primarily consist of revenues from the sale of subscriptions for email accounts, online calendar, online data storage and email marketing tools. The company’s subscription terms are typically one year but can range from monthly to multi-year contracts of up to 10 years depending on the product. Usually, the company collects the entire subscription fee at the time of sale but recognizes revenues from subscriptions ratably over the applicable contractual terms.

GoDaddy faces significant competition in domain, hosting and presence markets from companies like Endurance, Rightside and Web.com. Additionally, web-hosting and other cloud-based service providers like Amazon, Google and Microsoft that have recently entered the domain name registration business as upstream registries, and eBay and Facebook, which offer robust Internet marketing platforms have intensified competition in the space”

THE PRESENT

What’s not to like? At first glance, Godaddy did very well since going public 5 years ago. The stock price is up 168% since the IPO — nothing to sneeze about. And yet, upon closer scrutiny, one can spot that company’s stock price peaked 2 years ago and that in the last 12 months it remained… flat.

And looking into Returns within the GoDaddy’s Industry Range — its’s clearly below the Averages:

Interestingly enough, such results were achieved DESPITE the most aggressive share buybacks in the company’s history. In Q3 2019, GoDaddy announced its biggest-ever share buyback of $500 million. Moreover, on May 6, 2020, the company announced its Q1 2020 results and revealed that it “repurchased 10 million shares of its common stock for an aggregate purchase price of $542 million. These repurchases represent an approximately 6% reduction in fully diluted shares outstanding”

If you are tracking many of my previous posts, you probably realize that I’m not the biggest fan of share buybacks. IMHO, since share buybacks reduce the number of outstanding shares, it sends the “fake” message of a “greatly improved” per-share measures of profitability — overnight. Earnings-per-share (EPS) and cash-flow-per-share suddenly look so much better… It’s nothing more than “putting lipstick on a pig”. You can certainly do so, but it’s… still a pig.

According to a study by Mazzucato and economist Bill Lazonick, “Between 2003 and 2013 publicly listed companies in the S&P 500 index used more than half of their earnings to buy back their shares to boost stock prices, rather than reinvesting it back into further research and development. Those profits could be used to fund research and training for workers. Instead, they are often used on share buybacks and golfing”

For more share buybacks coverage, see my earlier post entitled: “Did INSEAD Just Bring Us French Revolution Of The 21st Century?

THE FUTURE

I first contacted GoDaddy’s CEO, Scott Wagner, and his team in January 2019. In my email, I wrote:

“Gentlemen,

I didn’t plan to contact you and advise — until I received a phone call today from your Customer Service rep. Please note that I’m a very satisfied customer — utilizing your services for a number of years, already. It includes: Domains, Managed WordPress, SSL Certificates, Website Security and Backups, etc.

During today’s call, I was asked if it would be helpful for me to review the info about plug-ins — that could boost traffic to my website. And at that very moment — it dawned on me:

Small businesses like CGE don’t need more SEO information — they need TURNKEY solutions that bring revenues, instead!

I explained to your rep that what I would really like is your COMPLETE implementation of a monetization solution that combines content and monetization. What I mean is that GoDaddy can:

1. Provide — a customized player featuring videos that compliment the client site’s content

2. Monitor — revenue and provide the client with a dashboard with real-time info including impressions, CPMs, and revenue

3. Collect — payments and share such revenues with the client

Now, I’m not writing to offer fake flattery. Your own Fact Sheet says it all: you have 18M CUSTOMERS WORLDWIDE and these are small business owners, often with 5, or fewer employees. Such customers have no time to study, understand, and/or implement SEO techniques. Do it for them! After all, show me a business that wouldn’t embrace additional revenue stream provided by …. GoDaddy. And if you charge $60 per customer to do so — your $1B of additional revenues is abstract no more. Or, as I often say: why am I confident that my strategy fits GoDaddy perfectly? You have the…. BTT:

• Brand — which is your true Factor Endowment

• Traction — with over 20 years of history

• Trust — earned by serving 18M of satisfied customers

You have also made many astute observations about AI in your presentations. Now, I have seen firsthand what works and what doesn’t — the good and the not so good. So, buyers beware…

Not since Y2K scare, the predictions of AI-linked job losses have turned the prophecies of Fear, Uncertainty, and Doubt (FUD) into such a massive cottage industry. In the past, the doom and gloom projections primarily aimed at blue-collar jobs — to be replaced by robotics and automation. Now, AI is being perceived as a threat to all — including white-collar professionals.

I aim to help separate facts from fiction. In case you would like to discuss how PracticalAI™ can help — I would be delighted to share with you my 30-year “wisdom”. This is what I do. I advise C-level executives, VC/CVC/PE funds & their portfolio companies — during due diligence of Artificial Intelligence (AI) investments. To do so, I rely on my 30-yr hands-on AI expertise”

The same day, I received the following reply from GoDaddy’s Steven Aldrich:

“Oleg –

Thanks for reaching out and for the compliments for GoDaddy and our customer care team.

Totally agree on our customer’s (and all entrepreneurs) want to find ways to grow their business through a complete solution and not having to assemble bits and pieces themselves.

We don’t have a formal advisory board so let’s set up a 30 minute conversation so I can go deeper on what you’re proposing.

Thanks,

Steven”

I was EXTREMELY impressed. And I had a great follow up call with Steven on Feb 6, 2019 — that I described in my email:

“Steven,

It was a pleasure speaking with you. I enjoyed our conversation and would like to thank you for a pragmatic exchange.

As discussed, I firmly believe that there are many practical steps to help GoDaddy grow — significantly. From offering GoDaddy players featuring videos that compliment the client site’s content and offer IMMEDIATE revenues, to an outside-the-box focus on new customers.

In particular, I would welcome the opportunity to help GoDaddy:

• Retaining Existing Customers — who upon discovering an alternative, will eagerly jump ship

• Acquiring New Customers — who have never been considered yet as potential customers

IMHO, many organizations analyze their customers in granular details. Outsider, like myself, may see the big picture differently, and the commonalities that unite the largest group of noncustomers — exactly as we discussed the case of Invisalign and Verizon!

Therefore, I would like to propose a simple way to formalize our relationship in the attached Strategic Advisory Agreement. It would allow me to better understand where GoDaddy is now, where it wants to be and how I can help you to get there….

Let me know if I can answer any of your questions…Thank you”

Few weeks passed, and after a number of attempts to reach Steven, I received the following email from him”

“Oleg –

Thanks for pinging me again … no questions.

I don’t have a project for you to help with and we have enough input into strategy, ML, and the use of data in building customer value. So there is not a role for you as an advisor for the company.

As a heads-up, I am retiring from GoDaddy at the end of this week”

And this was it. My well-meaning advice… fell on deaf ears.

A NEW CEO ARRIVES AT GODADDY…

After a few months, I learned that Scott Wagner retired and that the new CEO, Aman Butani, was appointed. So, I contacted GoDaddy once more:

“Dear Aman,

Congratulations and my very best wishes on your appointment! I tried REPEATEDLY earlier this year to work with the previous management on boosting the GoDaddy’s top and the bottom line (see below). Unfortunately, my recommendations were not considered. Now, that GoDaddy’s market cap is below where it was 18 months ago — I would like to speak with and to help you with the above. Are you available next week for a quick call? Thank you”

The reply quickly followed:

“Dear Oleg,

Thank you for your note. At this time I am not looking to add to my advisors but I appreciate you thinking of me.

Regards,

Aman”

Admittedly, I didn’t know how much Aman was aware of my previous communications with GoDaddy, so I decided to follow up with the following message. This was the last time I heard from GoDaddy ever since:

“Thank you, Aman. I appreciate your prompt reply — especially since as a new CEO you’re probably preparing your 100-day strategic plan right now. And I’m utterly convinced that the executives delivering a quality strategic plan within the first 100 days will significantly outperform those who are lacking such abilities. So, I commend your openness …

However, regardless of the choices you currently make — I’ll be thrilled to help you OUTPERFORM your goals and exceed your expectations by a HUGE margin. And here is why … As mentioned before, I’m a very satisfied customer of GoDaddy utilizing your services for a number of years, already. It includes: Domains, Managed WordPress, SSL Certificates, Website Security and Backups, etc.

And I frequently experience the upsell pitches from your Business Development representatives offering the info about some additional plug-ins that could boost the traffic to my website, etc. So, let me repeat: this is a “long way around the barn” for GoDaddy to grow serious revenues!

Small businesses like CGE don’t need more SEO information — they need TURN-KEY solutions that BRING REVENUES on day one …

Like any SMB, what I would like to see is a COMPLETE monetization solution! Yes, GoDaddy can build the website for the SMB — but so can hundreds of other providers. However, if such help also delivers a built-in solution for making money online such as: Pay Per Click Advertising with Google

AdSense; Selling Ad Space; Affiliate Marketing, etc. — you’ve created an irresistible value proposition and everybody wins! So, GoDaddy can:

1. Provide — a turn-key monetization that compliments the client site’s content

2. Monitor — revenue and provide the client with a dashboard with real-time info

3. Collect — payments and share such revenues with the client (eg. A 50/50 split, etc., etc.)

Your own Fact Sheet says it all: you have 18M CUSTOMERS WORLDWIDE and these are small business owners, often with 5, or fewer employees. Such customers have no time to study, understand, and/or implement SEO techniques. Do it for them! After all, show me a business that wouldn’t embrace additional revenue stream provided by …. GoDaddy! And if you charge $60 per customer to do so — your $1B of additional revenues is abstract no more!

Why am I confident that my strategy fits GoDaddy perfectly? You have the BTT:

• Brand — which is your true Factor Endowment

• Traction — with over 20 years of history

• Trust — earned by serving 18M of satisfied customers

Still not convinced? — just read about what I’ve done with Verizon 20 years ago! I wrote about it in: Keyword Spotting — The Art Of Listening & Observing

It’s the exponential increase in value offered to clients at a much lower cost — that makes all the difference. From my personal experience, I frequently demonstrate how product-oriented entities are usually losing ~70% of POSSIBLE revenue streams. In addition to the Push-Only approach, I focus on generating huge secondary and tertiary revenue streams — and call it: The Push, The Pull, and The AI Bull™. Such a strategy is scalable and sustainable — and as a side bonus, it also offers revenue smoothing. Let me help … Thank you”

IN CONCLUSION

I was trying to emphasize to GoDaddy that customer loyalty can be greatly improved by offering free advice and education. And it helps to enhance and to reinforce the BTT (Brand, Traction, and Trust). Yet above all, sustainable revenue growth and profitability — ensures customers’ long-term success — more than all the BTT components, combined.

It dwarfs the ability to improve the BTT — and offers a greater “stickiness”. It also generates a lower churn rate. For more details on above, see: “Deadly Marketing Mistake — And Two-Step Solution To Avoid Losses

My pattern recognition abilities allow me to see how to maximize the REINVENTION process, business offerings, and profitability. And looking at existing problems with a pair of fresh eyes — often brings a set of creative solutions, that were never even considered in the past.

P.S. You can find additional reinvention stories in my recent posts such as:

· Reinventing Bombardier

· Reinventing Boeing

· Reinventing Indigo

· Reinventing Booking

· Reinventing Andrew Lloyd Weber

Yet, whatever you do, remember this: Like in PROCUREMENT, single-source seldom works. Don’t leave your REINVENTION process in the hands of a single executive…

I’m at that stage in my life where I don’t care about BOD politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve CEOs’ problems & deliver results. So, I am in the business of joining Advisory Boards/BODs of the most innovative companies all around the world. And as one of the ultimate BusinessAI™ veterans on the planet w/ over 30-yr hands-on AI expertise, I also bring supreme business savvy to separate the wheat from the chaff…

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I used #AI in #Technology, #Finance, & #Renewable #Energy for 30-yrs. Now, I help #VC/#CVC during due diligence of AI investments & advise their portfolio Cos.

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Oleg Feldgajer

Oleg Feldgajer

I used #AI in #Technology, #Finance, & #Renewable #Energy for 30-yrs. Now, I help #VC/#CVC during due diligence of AI investments & advise their portfolio Cos.

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