Saturday, April 22, 2006

GoDaddy 2.0

Recently I started volunteering at the National Women's Business Center, a non-profit that provides educational programs for women entrepreneurs. Earlier this week I was a guest judge at a business plan presentation session. Most of the ideas were brick-and-mortar (specialty retail, childcare, holistic health). The owners, likewise, came from "real-world" backgrounds (architecture, HR, law).

Believe it or not, the crowd was practically a GoDaddy fan club. Everybody's registered at least one - and in some cases several - domain names. And the consensus was that once you're planning to build a website, you should definitely host it at GoDaddy. It made me feel like Godaddy ought to do something in the meantime to maintain their high level of goodwill.

GoDaddy currently has 9 million domains under management. Tier 1 Research guesses that it generates $200 million in annual revenue. On April 12, MarketWatch wrote that GoDaddy's possible IPO could value the company at $250 million. A week later, another MarketWatch article reported that Greylock Partners' recent investment in Facebook was based on a $550 million valuation.

In theory, Facebook delivers a highly-targeted audience of super-desirable 18 to 24 year olds. Its 7 million members include 72% of American college students; two-thirds of its users visit the site daily. In March 2006, the site generated 1.4 billion pageviews in ad inventory. And social networks, says MarketWatch, are great environments for building brands and selling products.

After spending a few minutes on, I'm not sure I'm convinced. I kept seeing completely irrelevant banners, featuring:

1. KIDZ BOP 9 ("18 more kid friendly hits, sung by kids for kids!")
2. ("get your business online fir $5!")
3. 1-800-PetMeds ("save a trip to the vet!")
4. ("up to the minute report for your commute!")
5. Orlando ("perfect family vacation destination")

The only advertiser that might have derived value from MIT undergrads was Even so, its "find a healthcare job" message didn't quite resonate next to the profile of a Class of 2008 Urban Planning major. While Facebook doesn't seem to deliver on its promised value proposition, might Godaddy be able to take advantage of its formula?

According to an article in today's New York Times, social networks tap into three passions of young people: expressing themselves, interacting with friends and consuming pop culture. (The article also points out that although MySpace generates one billion ad views per day, it produces less than 5% of Yahoo's revenue.) I think business owners have somewhat similar desires: to get the word out on their company, network with other professionals and find/purchase products/services that might help their business.

So here's an idea: what if GoDaddy rolled out a social network for small businesses? Currently, GoDaddy offers domain owners ad-support websites and blogs. But since users of these free services rarely produce compelling content, the resulting advertising inventory is limited in both quality and quantity. More importantly, GoDaddy derives no long term benefit from advertising to its customers' website visitors. A much more attractive audience is the domain owners themselves.

I'm envisioning a Linkedin-like service where domain owners could create company profiles which might include photos/descriptions of products/services, links to investors/vendors/partners, memberships in industry associations and networking groups.

The New York Times reported that MySpace is planning to turn advertisers into members of their community. Bands, movies, phone companies would have their own profiles, and teenagers could become "friends" with these vendors. I LOVE this concept, and I think it could have even greater value within a small business social network. Company owners could become "friends" with Dell and Staples and Citibank and receive discounts, new product announcements, invitation to events, etc.

In addition to creating ad inventory and strengthening GoDaddy's relationship with domain owners, a small business social network could encourage customers of other registrars to transfer their domains to GoDaddy. Last but not least, it would elevate GoDaddy beyond the ranks of Tucows and (Marketwatch noted these two domain registrars' modest valuations relative to their revenues) and give the company a much higher valuation.


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