Web 2.0 Podcast: What GoDaddy Knowsby Daniel H. Steinberg
GoDaddy CEO and Founder Bob Parsons delivered a simple but powerful lesson at the Web 2.0 Summit 2006. He says that people love using computers for search and entertainment but when it comes to resolving problems or learning features people much prefer to deal with other people.
This episode is sponsored by the Intel Software Partner Program.
This transcript created by Casting Words.ANNCR: GoDaddy CEO and founder Bob Parsons delivered a simple but powerful lesson at the Web 2.0 Summit 2006. He says that when it comes to resolving problems or learning features people much prefer to deal with other people. Here's Bob Parsons with what GoDaddy knows from the Web 2.0 Summit.
John: The next fellow I wanted to bring on after lunch, because I knew we all would kind of be in a lunch coma, and I knew Bob Parsons would be just the guy to take us out of it. He's a former marine, a CEO who blogs regularly, repeatedly, and with a lot of verve and opinion. A guy who runs his own radio show. And he runs GoDaddy.com, which is a very well known registrar.
He's going to talk about some of his tactics and approaches to business, and particularly to marketing. You may recall GoDaddy got more airtime for the ads that got pulled from the Super Bowl than the ads would have gotten if they had just run. He's going to talk a little about his approach to business. Without any further delay, I'd like to bring up Bob Parsons.
Bob Parsons: Hello everybody. One quick tip when it comes to blogging. Stay away from the Guantanamo issue.
When I was getting ready for this presentation, I checked out the overview for the conference and saw and this is how it's described more than 12 extraordinary thinkers and business leaders who will provoke, delight, and amaze the audience. Well, given that I sort of failed the fifth grade, would have failed the twelfth grade had it not been for the Marine Corps bailing me out so I could go to Vietnam with a high school diploma, you can probably scratch me off the extraordinary thinker category.
But there are some things that I do know. I know for example that you have to be awfully careful who you listen to. There's folks who are in the position of providing public advice and analysis who, if you try to please them, will happily guide you off the edge of the closest cliff.
Some of you might have heard that earlier this year, GoDaddy filed an S1 with the Securities and Exchange Commission to become a public company. Our S1 filing was approved by the SEC in early August. We filed it in March. I withdrew the filing the next week. That's right. The week after it was approved, I withdrew it. The whole process cost us more than three million bucks. You can call that the tuition for the education of Bob.
On my blog at BobParsons.com I was very open why I withdrew the filing. I cited market conditions as the primary reason, but there were other concerns. During the time between filing the S1 and withdrawing it - the quiet time, and I can tell you, as most major publication mentioned, a quiet time just about killed me I had the opportunity to interact with various market analysts, those that worked with our investment banks and also to read what was written by outside analysts and financial writers. It repeatedly amazed me how far some of them have gotten from understanding and appreciating the fundamentals. I didn't see much evidence that our financial system bothers with it much at all. In fact the thing they primarily focused on was short term accounting paper profits.
For example, here's something I know. It's a gift that I'm going to give you to hear today. It's something every one of you should instill throughout your business. If you do, it will make your business formidable and do nothing but make you money. This is something I became aware of back in the 90's. Now I know it's truer than ever despite all the technical advances that we've made.
You ready? Listen tight, here it is: People love the convenience and speed that comes with transacting business and interacting with each other over the Internet. But when it comes to resolving problems, or learning features, people much prefer to deal with other people. That's my gift I'm giving to you. Do with it what you will. That's why today, out of the 1320 employees who work at GoDaddy.com, 920 are in customer support. You can call us anytime day or night, any day of the year, and you'll get a highly trained tech our techs are all located in the Phoenix Scottsdale valley and they're the highest paid there. Forty percent of them have been with us two years. That's unheard of for a call center. The reason it's only 40% of them is because our growth has been such that it's not possible for that number to be any higher. Our service is that good.
But during the quiet period, I was asked time and again, "When will you get your customer service operations to scale? What can you do to drive your customers to use more self help so you can cut your support staff?" Yes. To be honest, when I'm ready to stop being the world's fastest growing and largest domain name registrar, I'll start herding my customers towards self-help.
There's another thing I know. This is not nearly as profound but I think it's interesting to the extent that it illustrates what tunnel vision many, though not all, financial writers have. To me operating cash flow is far and away more important than accounting or paper profits. You can actually use cash flow to make payroll and buy equipment. Imagine that! Somehow financial writers don't seem to understand that. With the exception of a mortgage on one of our data centers, GoDaddy has no debt and has never had any debt. We are entirely self-funded and have held healthy cash reserves. This year we'll have cash receipts of 340 million dollars and positive cash flow from operations of 52 million. That's a million bucks a week.
Just a few days ago, I told my mother and she has never forgiven me for being such a poor student, she tends to remind me of that all the time - I told her, I said, "Mom, I know guys who passed the fifth grade and graduated high school with honors, and they don't throw off a million bucks in cash a week." But she didn't care. Just like all the financial writers, cash flow means nothing to her.
Here's another example. When it comes to promoting your company, everybody's going to want you to fall right in line and appeal to a general audience and offend no one. I think if you do that, you've wasted your advertising dollars. You've got to be different, and often to be different and effective, you've got to be polarizing.
One of the problems with marketing is that everybody, bar none - even market analysts and financial writers - they all think that they can do it. I was even asked by one analyst if after we filed our offering whether I was willing to quit being so offensive with our advertising. Ha, me offensive? You've got to be kidding me. Let me tell you a story. Thank you.
When it came time for the 2005 Super Bowl, given the Janet Jackson fiasco of the previous year, I knew that was the time to take a chance. I picked the ad agency we used for the Super Bowl based on an ad they did for a company called Mike's Hard Lemonade that was both hilarious and it was really edgy. The agency told me that the Mike's ad that I liked was rejected by most every network and I only happened to see it because I was watching professional bull riding on OLN.
See, that's my level of television. OLN accepted just about any ad that you sent them because not too many people sent them ads, you see?
Anyhow, after I hired the agency, because they were working on a Super Bowl ad and they were gun shy, the first several creatives from the ad agency were milder than I wanted. I pushed back and insisted we hire a well-endowed female brunette with the GoDaddy name emblazoned across her chest because I knew that's where every guy that was watching that game would be looking.
You know that's where you'd be looking. In fact, the agency did not want to do the ad. I had to threaten to fire them to get them to give me what I wanted. I did. I also wanted something that would point viewers to a hilarious video on my website that would be an offshoot of the ad. The goal was to create viral marketing that would enable us to show people what GoDaddy.com was all about. When we submitted the storyboard to Fox it was approved. I don't think they really looked at it.
Then when we filmed the commercial and submitted it to Fox, it was rejected several times. Eventually, a few days before the game, it got the go ahead. When they finally approved it, Fox came back and said, [laughs] "Hey Bob, your ad is approved. By the way, you want to buy another spot?"
I thought about it for about half an hour and said, "Yes." The rest is history. I was lucky enough to have the first running of the ad offend somebody that had a lot of pull. To this day I don't know who it was, God bless them. But it got the second showing of the ad canceled and this has never happened in the history of television, much less on the Super Bowl and our business shot through the ceiling because of the controversy that happened. We were lucky indeed. That ad is now included in college textbooks and is being used as an example as one of the most effective TV ads ever.
We've been promoting our business ever since with what has come to be called GoDaddy-esq ads. To be a GoDaddy-esq ad, that's defined as being I'm actually quite proud of this somewhat tasteless and slightly inappropriate.
I can tell you that the biggest mistake you might ever make, particularly with your advertising, is trying to please everyone, particularly investment analysts. Do that, and no one will notice you've wasted your money. I think it's much better to alienate 10% of your audience and have the other 90% take sharp notice.
Here's another good example of an advertising risk we've taken in an area where other advertisers definitely fear to tread. We were one of the first major sponsors to step up and sponsor Web 2.0 phenomena like the Pod Show Network. We did it in a different way than anyone has ever done. Instead of providing ads we produced or scripted, we just sent the networks some bullet points we wanted to get across and told them to let the podcasters create their own ads. You can imagine what happened. Some of the ads have been hilarious. Some have been very creative. Some have definitely been weird. But all of them have been tailored specifically for the podcasters particular audience and in that respect they've all been perfect.
I'm going to tell you, I've got a clip I want to show you that shows a range of those ads. You're going to see - at least the last one - some of you it might make your hair stand up on edge. But anyhow, Lauren, why don't you roll our clip.
Man 1: I'm serious. We use GoDaddy.com. Seriously, I registered a domain. I used GoDaddy.com.
Man 2: Good deal.
Man 1: And I have to say we're drunk enough we can't lie. You can't lie when you're drunk.
Man 2: Let me say something about GoDaddy when we're done.
Man 1: Honestly, they called me. I was playing D&D online. I was playing and all of a sudden my phone rang and I was like, "Hello?" And they were like, "Hi this is GoDaddy.com and we just wanted to see if you had any questions about your domain registration?" I was like, "Are you kidding me? No, I'm fine." Click. And I was like dude GoDaddy called you. That's awesome! We're drunk enough to not lie.
Man 2: Here's the thing.
Man 1: We use GoDaddy.
Man 2: The only reason I use GoDaddy is they're cheap as shit.
Man 1: And we are never going to do this podcast again. Why not buy domains? Hot commercials.
Man 2: Hot commercials. The fans love your commercials.
Man 1: Who is that chick?
ANNCR: This episode of the show sponsored by GoDaddy.com. Enter code FRANK from the link in the sidebar and get your domain name for $6.95 per year.
Man 3: So that worked out. That's how you sponsor shit. Now I can buy lights.
Woman 1: Have you ever seen the Thin Man movies? I like new movies, but I kind of miss the old film noir movies. Like this.
Woman 2: Who are you and what are you doing in my room?
Man 3: I'm the fellow you called. Well, actually, you called my agency they called me, but that's just minutia. You have some sort of dilemma?
Woman 2: Why yes I do.
Man 3: What is it doll?
Woman 2: Well I have this killer Web 2.0 idea and I don't know how to start. Can you help?
Man 3: Indeed. Mind if I sit?
Woman 2: Oh of course, I'm sorry. Make yourself comfortable.
Man 3: My experience in this crazy world is good ideas start with a good name. What are you going to call it?
Woman 2: I don't know. I have some ideas based on the concept.
Man 3: Then here's what you need to do kid. Go to GoDaddy.com on the Internet.
Woman 2: GoDaddy?
Man 3: Yes, but watch how you say it doll. You could get a fellow riled up.
Woman 2: Maybe I wouldn't mind getting a fellow like yourself a little riled up, mister?
Man 3: Call me GB. Now I've got to go. Use this code when you checkout. That will give you 10% off your order.
Woman 2: GB One. Is this your personal code, GB?
Man 3: Yes and I don't give it to just anyone. Now I've got to see a man about a situation. Excuse me doll and have a good day.
Woman 2: But wait, GB, I have more questions?
Man 3: And I have more answers but they'll have to wait for another time and another place.
Woman 3: GoDaddy is a Go, Daddy.
Bob: I didn't make any of those ads. I'm just saying that's what the podcasters made. It's a full range of them and of course they all work for their particular audiences. We've had reporters like NPR bring some of the dicier you can imagine which ones podcasting ads back to us and they say, "Did you GoDaddy know about this ad? Are you OK with it?" Our response was, "No. And yes."
So there you have it. My message to you is this. Don't forget the fundamentals. And be careful, be very careful, who you listen to. And that, my friends, is what GoDaddy knows. Thank you.
John: Thank you so much that was great. Thank you.
ANNCR: What GoDaddy knows from Bob Parsons at the Web 2.0 Summit 2006.
Daniel H. Steinberg is the editor for the new series of Mac Developer titles for the Pragmatic Programmers. He writes feature articles for Apple's ADC web site and is a regular contributor to Mac Devcenter. He has presented at Apple's Worldwide Developer Conference, MacWorld, MacHack and other Mac developer conferences.