GoDaddy has a cash machine in its headquarters in Tempe, Arizona.
But it’s not an ATM. When a salesperson hits a certain number, they’re invited to put on a special jacket with big pockets and crouch down in a clear plastic booth in view of the rest of the team.
The floor is a metal grid. Below the grid is a powerful fan.
Then the fan turns on and the booth is filled with flying money. Whatever the salesperson can grab and stuff into their pockets in the next 15 seconds, they get to keep. At the end, they’re told to stay crouched so they can snatch any leftover bills from their back before they hit the floor.
“They can make 600, 700 bucks,” says CEO Blake Irving.
It’s just one of the many ways Irving’s company rewards the people he calls GoDaddy’s “secret weapon” — the company’s 3,500 customer care agents. There are also NASCAR races, special events with inspirational speakers like Aron Ralston (the rock climber who cut his own hand off when it got pinned under an 800-pound rock), and even dinners with the CEO.
These care agents are the key to the company’s future, Irving says.
Turning the small business ghetto into gold
If you’ve ever run a small business, particularly in the U.S., you probably used GoDaddy to buy your domain name — the .com (or .whatever) that lets everybody find you on the web. The 18-year-old company claims it’s registered 60 million domains, out of a total of 294 million in the world.
“If you take the next 10 guys in the business and line them up next to each other, they wouldn’t be our size,” says Irving.
A lot of those business owners also use GoDaddy to host their web sites and other services, like email. Recently, GoDaddy started reselling Microsoft’s Office 365 services, including email, replacing its own homegrown services.
How does GoDaddy think it can stay ahead of tech giants who specialize in business software, like Microsoft with Office 365 and Google for Work (formerly Google Apps)?
The trick is that GoDaddy caters to a market that most big tech companies have given up on: Small businesses.
“Most of our customers are businesses that have less than 5 employees,” Irving explains. “We have bigger ones. But we call call ‘mid-markets’ 10, 20, 50.” Microsoft, where Irving spent 15 years as an executive, including leading its consumer online business, calls businesses with 1,000 employees “mid-market.”
The reason why most big tech companies don’t spend a lot of time with small businesses is that they’re incredibly expensive to reach, like consumers, but there aren’t as many of them. And once you’ve reached them, they don’t provide nearly as much revenue as larger companies.
But GoDaddy gets around this. The company’s longevity — along with some controversial and racy TV ads (which Irving says the company is moving away from) — means that a lot of small business owners already know the brand, so naturally turn to GoDaddy when they think of building a site.
GoDaddy knows this, and makes sure its products are super-easy to figure out for the sole proprietors and small business owners who don’t have a dedicated tech person on staff.
For instance, when Microsoft built its tools for setting up an Office 365 email account, it created 22 screens for IT administrators to set everythign up. GoDaddy’s developers turned them into a single page.
“A small business guy, he’s got 5 employees, he’s got 15 minutes to do this, they don’t have an IT guy. We’re their IT guy.”
The “secret weapon”
That’s also where GoDaddy’s 3,500 or so customer care reps come in — they’re doing a lot more than reading answers from a script.
Calls are routed to particular support reps based on their expertise, and reps periodically reach out to customers to see if their needs are being met (and, to upsell them to more appropriate packages if their small business has grown). Reps are paid bonuses not based how long it takes to resolve an issue, but on their customer satisfaction scores and referrals.
“We never force someone to get off the phone, we don’t care if it takes all day,” Irving says. “It’s a big deal. Talk to customers, or experience them yourself if you haven’t.”
Turning a profit?
GoDaddy is now a publicly traded company — it went public in April, after 18 years in business — and it’s losing money. Last quarter, the company lost $US71 million on revenue of $US345 million, and revenue was up only 17% from a year ago.
Won’t there be pressure from Wall Street to cut back on those customer care reps?
Irving doesn’t think so. “We don’t view our support organisation as a cost. It’s a salesforce. A salesforce — they do a quarter of our revenue,” he says, as they do a lot of work upselling small businesses to more services as they grow. “They’re the size of Yelp — Yelp’s entire revenue stream.”
Irving says that analysts are starting to realise that GoDaddy works like a software-as-a-service company — customers pay for a year of service up front, but GoDaddy doesn’t book that revenue immediately, instead spreading it over the course of the year. The important thing now is that GoDaddy’s generating a solid operating cash flow ($US47.3 milllion last quarter) out of a market that no other tech company has been able to conquer.
The business is also resistant to recessions. When the economy turns down, one of the first things a lot of people do is hedge their bets against being laid off by hanging up an online shingle. That means opening a web site — which will probably be hosted by GoDaddy.
“Our business I won’t say trades an inverse to the economy, but it is relatively resilient,” Irving says. “If you go back and look at the company’s growth curves over time, we’ve had a number of hiccups in the economy in the 18 years that this company has existed, and this company has not been affected.”
In case you were curious what it looks like, here’s a video of the cash grab: