Worried about GoDaddy flying-by-night with your precious website? Read what makes GoDaddy trustworthy enough and the story behind how GoDaddy got there.
€ http://godaddy.com € NYSE: GDDY € is a publicly traded web hosting provider and domain registrar. Founded in 1997, it is headquartered in Arizona, USA.
GoDaddy is the largest domain registrar and manages over a whopping 65 million domain names. It employs more than 5000 people and serves well over 20 million customers. In a nutshell, GoDaddy is the Google of domain name registration world.
GoDaddy is primarily in the business of
1. Domain Name Registration
2. Web Hosting Solutions
3. Website Creation Tools
It’s always nice to know about the history of an organization to know where they are coming from and how stable they are. It is much too obvious that you should rely on a twenty old company rather than a twenty month old for your business.
GoDaddy is one of the oldest surviving internet companies. GoDaddy was founded in 1997 by Bob Parsons and was called JoMax Technologies. JoMax re-branded itself as GoDaddy in 1999. According to official spokesperson at the time, the name was used for being cheesy and memorable.
The mid 2000’s marked the beginning of an era where every company wanted to move from being a noun to a verb. Yahoo! made high decibel pitches of Do You Yahoo!? Adobe started promoting “Photoshop that image” on discussion forums and of course, post its IPO, everyone was already Google-ing or still better Googling.
It was in this climate of “We are a verb not a noun anymore” that GoDaddy branded itself as ‘GoDaddy’ from the initial ‘Go Daddy’ of that late 90s.
GoDaddy has never looked back since that time. Through a string of cleverly planned acquisitions they became the largest domain registrar surpassing their competitors by a wide margin.
Facilities and Infrastructure at GoDaddy
GoDaddy’s grand success at domain registration and web hosting is backed by a huge sprawling data center in Phoenix, Arizona. The complex boasts amazing state-of-the-art physical and online security features.
GoDaddy’s Corporate Strategy – What makes GoDaddy so Successful?
A large number of business schools nowadays have a case study on GoDaddy. These MBA students and professionals attempt to analyze and possibly replicate the grand success of GoDaddy. The general consensus of these studies seems to be that infrastructure of GoDaddy is only an enabler in the success of GoDaddy, it is not the main reason. The studies seem to point out that GoDaddy is great (and they mean really great) at marketing. Unlike the popular perception of marketing being the science of putting irritating ads wherever eye falls, marketing is the science of providing customers what they need, where they need at the price they need.
And GoDaddy has fixed all the three pillars of marketing. They provide what people need (reliable hosting, easy website construction and domain names) at the price people want (they are the cheapest) and whenever they want (being online it is 24 x7, but so are the competitors. So this is not much of a differentiator).
GoDaddy figured out early that in an open free market such as that of domain name registration and web hosting where there are countless competitors and barriers to entry are low, there can only be two ways of survival –
1. Be a differentiator – provide extra-ordinary services OR
2. Be the lowest cost player
Being a differentiator in the business of domain name registration and web hosting is pretty difficult. It is what economists would call commodity market. Domain name registered with company X, after all, can be no different from the domain name registered with company Y.
Therefore, GoDaddy chose to be a cost player. Most people registering domain names and requiring a web hosting solution are first timers. They are just venturing into online business or still aren’t making loads of money. They are invariably on a tight budget. You can imagine how many Google.coms and Orcle.com might be getting registered every day. Moreover, players like Microsoft.com do not go looking for shared web hosting or a website builder to get started. This market is characterized by customers looking to save every single penny of expenditure.
This strategy has paid off for GoDaddy. Once they became the lowest cost player, customers flocked in. This allowed them to allocate capital for advertising and sponsorship of sports events. Their advertising strategy focuses on what they do best – provide lowest cost domain name registration. Like a vicious spiral, there is a sacred anti-spiral. GoDaddy’s popularity and outreach are a testimony to that anti-spiral.
For the sake of completeness, let’s analyze how a differentiator would have used the additional money they receive from the rising sales. A differentiator would have ploughed back that extra cash into further improving the infrastructure without increasing the price much. But this strategy is unlikely to yield much benefit because most customers are cost-conscious and prefer a low cost solution over the one which provides more features.
GoDaddy’s Web Hosting Business
GoDaddy has often been criticized for being poor at being customer service and slow speeds of its hosting solutions.
This is of course unfair to a great extent. You can’t expect royal treatment for pennies. If you go with the lowest cost provider you must be prepared to endure certain hardships. This isn’t cheating. It is a survival tactic on GoDaddy’s part. If they start rolling red carpet for each of their 20+ million customers, they would be in chapter 11’s protection in no time. Providing extra-ordinary services at low prices is recipe for just one thing, and you guessed it – disaster.
If a customer wishes to have a high speed and a customer service executive tailing him at every WordPress theme change, he would have to go with a differentiator rather than with a low cost provider such as GoDaddy.
Why is GoDaddy so Successful?
Many consider GoDaddy a failure. In the period between 2009 and 2015 GoDaddy made losses and has failed to post a profit. The detractors fail to point out that the company has a market capitalization of 4.62 Bn $. Most people would fail to count the number of zeros there and surely nobody reading this sentence will ever hold that much money in his hand.
GoDaddy’s revenue stand in the vicinity of 1.5 Bn $. GoDaddy being a cost player means that it is not the top line (revenue) but the bottom line (the profits) that matters most. GoDaddy’s stock has remain range bound since the IPO between 29 and 35, and this low beta is a positive sign for the investors.
But the fact remains that GoDaddy is good at what it does – provide cheapest name registration and web hosting. After so much thrashing, GoDaddy still remains one of the most popular web hosting provider and domain name registrar. This may partly be attributed to the corporate strategy described above. But it must be noted here that part of GoDaddy’s success is because of the way Google and other search engines work. Google’s algorithm is designed to not pay much attention to a new website. Even if you are Professor Donald Knuth writing on Algorithms, Google and other search engines will ignore you for the first few months. (SEO experts claim that it is six months.) During this darkened period a web entrepreneur cannot be sure if he is going to make it to the front page of search engine rankings. Understandably, he does not want to shell out too much money in this period. Since GoDaddy provides no-frills web hosting and the traffic in this initial period is low anyway, odds quickly turn in GoDaddy’s favor.
GoDaddy is likely to remain robust in the coming years, in spite of the changes at top. This is because GoDaddy is a cost player in a market which is the epitome of cost-conscious customers. It is quite likely that new web entrepreneurs will continue to flock to GoDaddy as they have done in the past. GoDaddy may not be the (and is unlikely to ever be the) Google of web hosting but it will continue to receive new customers. GoDaddy may have a substantial outflux of customers, they have a larger influx of new customers.
Overall, GoDaddy is strong enough to be trusted. It has survived long enough to be trusted with your website and domain name.
GoDaddy is the largest domain name registrar, it will continue being the front runner in that space. GoDaddy will continue being favorites of first-time web entrepreneurs and owners of risky web-ventures. This outlook is largely because of the customer behavior in this space. Most customers are cost conscious and tech-savvy. Lack of a technical feature, or a DIY imposition is hardly a problem for these customers.
In a nutshell, GoDaddy has got the pulse of customers and has chosen a corporate strategy which is in tune with the consumer behavior. The bottom line may not look favorable at the moment, but future does look promising.
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