Domain has and always will be an entry point for many people. To the extent that the other entry points shift power, control and choice away from GoDaddy to Shopify, Wix, Squarespace, Amazon or Google, those are the existential risks that GoDaddy faces. - Former SVP, Domains at GoDaddy
GoDaddy (GDDY) is the largest domain registrar globally. The business model is simple: acquire domain customers online and upsell higher-margin ancillary services like hosting, email and website building software.
Over the last decade, the company has spent $2.4bn+ in advertising to build drive traffic and resell domains like .com and .co.uk. Reselling domains is a commodity business if it’s standalone. However, GoDaddy’s ability to upsell high-margin ancillary services drives a higher LTV / CAC relative to standalone registrars.
The chart below shows how a customer who adds a website on top of a domain has ~5x the recurring revenue and 43% of the churn level as a customer that only buys a domain. A customer that adds both email and a website with a domain generates 10x more recurring revenue with a third of the churn level.
The higher the attach rate of ancillaries, the higher the LTV, and the greater GDDY's CAC advantage over standalone registrars.
Our key takeaway from our recent interview with the Former SVP of GDDY Domains: Shopify poses the biggest risk to GDDY.
[Shopify] has created a different entry point. If you want to sell something of value, you need a way to transact with people digitally, and Shopify is the top choice, as opposed to getting a domain and putting a website on top of it. They have flipped the entry point by allowing you to set up a website in 15 to 20 minutes and start selling your stuff. You can worry about a domain later. - Former SVP of Domains, GoDaddy
This document may not be reproduced, distributed, or transmitted in any form or by any means including resale of any part, unauthorised distribution to a third party or other electronic methods, without the prior written permission of IP 1 Ltd.
IP 1 Ltd, trading as In Practise (herein referred to as "IP") is a company registered in England and Wales and is not a registered investment advisor or broker-dealer, and is not licensed nor qualified to provide investment advice.
In Practise reserves all copyright, intellectual and other property rights in the Content. The information published in this transcript (“Content”) is for information purposes only and should not be used as the sole basis for making any investment decision. Information provided by IP is to be used as an educational tool and nothing in this Content shall be construed as an offer, recommendation or solicitation regarding any financial product, service or management of investments or securities.
© 2023 IP 1 Ltd. All rights reserved.
Subscribe to access hundreds of interviews and primary research