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Photo Illustration by 731; Suit: Jason Homa/Getty Images; Racing Outfit: Chris Graythen/Getty Images; Blue Dress/Patrick's Head: Jason Merritt/Getty Images
KKR & Co LP
Costco Wholesale Corp
Every month, one standout Go Daddy employee puts on an apron and steps into the “cash machine.” The contraption looks something like a telephone booth, but its only function is to spray money at the person inside. The goal: Stuff as many flying, fluttering bills as possible into the apron pockets in 10 seconds. “Everybody gathers around to watch,” says Elizabeth Driscoll, a spokeswoman at Go Daddy, which helps businesses register domain names and run websites. “It’s pretty exciting.” When the whirlwind ends, participants usually exit with a few hundred bucks.
Wacky moments like this barely merit a mention next to the company’s long, sensational history of stunts. In the 15 years since its founding, Go Daddy has earned more than its fair share of press, much of it acid-tongued. There were the Super Bowl ads full of scantily clad women which brought charges of sexism. In 2011, video surfaced of founder Bob Parsons killing an African elephant, part of a regular series of expeditions he says help protect farmers’ crops from rampaging pachyderms. And late last year the company’s support for an antipiracy bill opposed by Google (GOOG), Twitter, and other Web giants earned the domain-name company the loathing of the Internet’s cognoscenti. Wikipedia founder Jimmy Wales called the stance “unacceptable” and switched his site to a different domain registrar.
Ross D. Franklin/AP Photo
The litany of headline-grabbing moments made Go Daddy a household name in an industry few outside the IT sector care about. It’s been good for business, too: Sales reached $1.14 billion last year, up from $493 million five years ago. Private equity highfliers Kohlberg Kravis Roberts (KKR), Silver Lake, and Technology Crossover Ventures see the potential for even more upside. In July, they paid about $2.25 billion for a majority stake in Go Daddy, a deal that left Parsons fabulously wealthy and made millionaires of 35 employees.
The private equity types believe they can greatly increase the value of Go Daddy by expanding internationally and selling more services, such as data storage, to the companies with which Go Daddy already does business. The financiers, though, also have a reputation for axing people, hiking prices, and slashing costs. That reputation may not sit well with Go Daddy’s employees, patiently waiting for their turn in the cash machine, or its customers, who’ve come to expect high-touch service.
Change is good, says Warren Adelman, a nearly 10-year veteran of the company who took over the chief executive officer position from Parsons in December 2011. “We are synonymous with inexpensive domains and sexy girls,” Adelman says. “I think there is a different message we have to expose people to.”
In the years since Adelman joined, Go Daddy has come to play an important role in maintaining the Internet’s plumbing. More than 53 million domain names have been registered through Go Daddy, and it hosts websites for more than 5 million account holders. Despite its rogue public persona, Go Daddy has achieved a reputation for great service. Three-fifths of its 3,500 employees work in customer care, and it has won several awards for its service. Sign up for a Go Daddy account, and an actual human will call within a day to make sure everything is going smoothly. It’s the type of service you might expect from a company selling a $50,000 car rather than a $12.99 per year domain name.
None of that will change under private-equity ownership, insists Adelman. “We have resisted every attempt and suggestion from a consultant since the dawn of man to outsource customer care,” he says. “We don’t look at it as a cost center” but as a revenue generator, he adds, crediting customer-care reps with $250 million in sales last year from simply answering questions from potential customers. Go Daddy is in the midst of opening an Indian call center that will serve its customers on the subcontinent, and Adelman has a wry response for those who worry the move is a steppingstone to greater reliance on low-wage, overseas labor. “One day a year we might reroute the trunks so that the U.S. centers handle India,” Adelman says.
There will be changes, of course. The company will still air pricey ads during the Super Bowl and the Olympics, but Adelman says Go Daddy’s marketing will be less racy than in the past. “Go Daddy has been rare in its ability to attract attention,” says Adam Clammer, head of the technology group at KKR. “If we can attract attention but also layer in real content so that customers understand the whole package, then even better.”
The most ambitious projects underway at Go Daddy include increasing its international business and offering more sophisticated cloud-computing services. Go Daddy has about a dozen data centers around the globe. It wants to rent some of that storage and computing horsepower to customers. That would put it in competition with more technologically sophisticated companies like Amazon (AMZN), which leases its servers to technology titans such as Netflix (NFLX). Go Daddy sees itself becoming a hub for small to midsize businesses: They’ll buy their domain name from Go Daddy, later tack on some infrastructure services, and, one day, maybe even rent bookkeeping software or other products.
Melanie Posey, an analyst at the technology researcher IDC, credits GoDaddy with offering higher-profit services, but cautions that it’ll be tough to use customer care as a differentiator in these new markets. Cloud users tend to be very tech-savvy and are all about “automation and not really needing to leverage direct customer support,” she says.
Even under private equity’s culture of abstemiousness, the perks won’t disappear, says Adelman. For some all-star customer service reps, the company pays their mortgage for a time or sends them on trips around the world. Others go on holiday shopping sprees at Costco (COST). And yes, the cash machine will continue spitting out bills.
The bottom line: Go Daddy may become more sedate but remains committed to customer service as it focuses on growth overseas and cloud computing.