Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business Weekdaily with Carol Masser and Tim Steneveek on Bloomberg Radio.
Carol, you've talked about this a lot. Small and medium sized businesses just helping to power this economy. According to the US Chamber of Commerce, small businesses in the US are responsible for providing employment for about half of the American workforce, and they represent more than forty three percent of the GDP of the US. So understanding small businesses gives us a good idea of how the economy is doing.
We love, love, love talking to this space. Mark McCaffrey has a great read on all of this. He's the CFO of go Daddy, which provides a broad range of online services for small and mid sized businesses think internet domains, website hosting, and so much more. The company, by the way, has a market cap of close to twenty five billion dollars, so it sees a lot of small businesses and it
serves more than twenty million customers around the world. Mark nice enough to join us in our Bloomberg interaction.
You're not wearing any goggins goggles?
What is going on?
You saw a little promo today.
Oh I saw yeah, I saw it.
Walton, he's he's a big fan of ours, right, obviously got us back into the super Bowl and everything. But but you know he's an entrepreneur. You know he is an entrepreneur.
Does he really make these classes?
Well, he has many ventures that he has gotten into through his life. And when he came up with this idea for the goggles, we just thought it was the perfect match for us. Here. You have a great actor who is passionate about small businesses, wants to launch this goggle idea, and you know, we breadcrumbed it out through the whole fall. We started, well, he started with announcing it on social media, got a little buzz. We started with announcing that we're going back to the super Bowl.
Got a little buzz, and then we tried to drive everybody to connect that he was going to be our new spokesperson. And he is fantastic.
So what's the ROI on that?
The the ro o I? I? You know, we cost money?
Oh, super Bowl ad costs money. I saw he was at the New York Stock Exchange today. He's not doing that for free.
He is standing up there ringing our bell this today because it was our tenth anniversary of being a public company. But when you think about where GoDaddy was as a domain company and where we are now is a one stop shop for entrepreneurs. We need to get that message out like we have such useful tools for the mom and pop shops to now do business not only on the corner but in social media. They want to do professional emails, they would want to do marketing campaigns. We
can handle it all for them. And we did that with Walton, like we handled all his platform for him, so we can get out there and sell this. So so you know, hey, we've been around for a while. This is a long term play. We're not going anywhere. We have a great company that grows. We're profitable, we generate a lot of free cash flow, and it's because we have such good retention with our customers. You look at our urpoo it's just over two hundred dollars for
an entrepreneur micro business. That's a good deal. We prought a lot of value and that's why they keep coming back.
So remind our audience. So in terms of churn and stuff, are that once you get a customer, how long do they typically stay with you.
So they'll stay with us if we if we get them to a second product, our retention almost goes through the roof with them. If we get them to a third product, we have a customer for life, and that's why we have this compounding element of cash flow. People just keep renewing, so we say our average is around eighty five percent. But if they the longer they stay and the more they use our tools, or if they
engage with our care guides. You can actually talk to a live person with us in our care organization still and when they engage with our guides, that lifetime value just goes up. So we always use the statistics when we're out there talking. If you assume a domain is one X. If we can get someone from a domain to an email, to a website and then to transacting, it's eighty three x LTV for us on our customers.
And we do that because we focus on our customers like this is the place we go to, like we know this.
Customer, let's talk AI. Because you guys have your AI platform go downy arrow, when are we going to see it start to make an impact on our poo.
So we're starting to see the beginning stages of the monetization. And again, we are a long road. We're not in a rush here to get to a certain place in a short period of time. We're taking our customers from discovery to engagement and ultimately to monetization, and that starts to show up in our renewal rates. Now we just launched this recently, but when you think about it, twenty
million customers you know we have out there. This is our platform, it's consolidated, and we're starting to see our average quarter size goes up. We're starting to see our over now for us, remember it starts with bookings and then over time it becomes revenue. And that's the point that it starts to hit our arts. Okay, so it takes a little time to get in there, but what I always say is, hey, this is about the long term play supporting micro businesses because we want them to
continue to be successful. If they thrive. You gave some great data out there. If they thrive, we do great.
Are they thriving right now?
Well? So this is a very durable, optimistic group. They always feel good about what they're doing. And you know what's amazing about this group too, is even if they do hit a failure point.
They generally they felt good during the pandemic.
They felt good on ring the panet.
They were optimistic a financial crisis.
They we actually see some of our numbers go more into entrepreneurialism. When when you know you're you're trying to do a side hustle or a side gig, or you want to start selling. I always joke. My joke is I want to sell my baseball cards all of a sudden to make a side business out of it. You know, I have to do that somehow. So this is a
group that is just very optimistic. Doesn't mean they're always confident in the economy, right, but they are optimistic in their chances to be successful in doing what they love.
So they're willing to at least make that first yes to get their business going.
Yes.
I mean, so, what insight do you have, especially among your customers who are repeat customers, stay with you, expand their services with you. I mean, that's a better indicator perhaps, right in terms of what they are seeing about the economy. What are you seeing from them? What are you hearing from them?
We are hearing that they want more help reaching different channels, audiences, themselves. So you think about it, right, you're maybe selling in your local town. Well, now social media becomes a platform. But if you're you know, I ran into a customer and choose panicking because her daughter was going off to college in a month, and her daughter did all her
social media campaigns. So we have a tool that literally takes all the inbound emails coming in from all the platforms, creates an outbound marketing campaign for you, and it'll do it based on you know, whatever you're These are the type of tools we provide, and this is why this is what they need. They need it all to work, you know, because you're not talking about a sophisticated customer group or.
Right, but that is more of like my daughter is going to college and I just now I need to do it. But are you seeing any signs of stress? Because you know, as Tim said, mark coming into it, small business, medium sized business, but small business the backbone of what we do. And so when there's some stress, and we've seen it in business sentiment surveys, cutting back
on CAPEX consumer sentiment as well another side. But I mean, I'm just curious, are you seeing any signs of stress or holding back a little bit.
We haven't seen any signs of that coming out of twenty twenty four. Now, I will say in.
The last couple of weeks.
Yeah, so you know, I we'll get out there with this current year when we have a chance to get out there. But you know, you remember, we are actually engaging a lot of these entrepreneurs before they actually become a small business. That's why we use the term micro business, and that micro business is still trying to get out there and do more. Right now that you know, what we saw coming out of twenty twenty four is the
demand at the top of the funnel. And remember a lot of people just come to us for a domain.
Yeah.
Name rights still healthy, it's it's still very very much healthy.
And that's the book of your business.
It's a lot of our business. Yeah, but that attach you know, is going up for us, which means they're coming in with intent. And if you come in with to get a domain name and you have an intent to do something, that is a great sign for us.
But I'm curious about how you grow from here because the customer account has seemed to plateau a little bit, and this market is only so big. What do you do do you go up market.
Now, listen, we have a right to win where we are in the micro business and we will continue to fin.
So this is like fewer than ten employees micro business.
Yeah, micro business could be around ten maybe a million dollars a year type of business. This is this is where we have a right to win. This is the customer we know. I say in technology two things you always have to be able to do innovate and know your customer. And we have the ability to do it in this market. And listen, we generate a lot of free cash flow and we have a strong balance sheet. We just hit ten years of public company. We are so excited about the next ten years and our ability
to keep this compounding on it. Why this group needs these tools to be successful. They need to know how to use technology and they can't be dealing with eight applications at night trying to figure out which one isn't working or working. They just deal with us.
So you're about twenty one million customers, right, Yeah, how do you kind of grow beyond that or what are your expectations because it does seems like it seem like you've plateaued a little bit.
We get some of the research we have focused on. You know, hey, we call it profitable growth and so making sure that we are continuing to drive profitability and grow at a steady rate.
So you would rather keep that base and make each of those customers more profitable for you?
Yes, right, right? And you think about it. We for our customers, there's three levels of it. There's the new customers just coming in which we have the ability to sell them products, and then attach we have our existing customers. We have a lot of existing customers and our ability to get them to even attach currently is a great
opportunity for us. And you think we launch commerce a couple of years ago and our ability to convert our existing base over to our commerce platform has been able, allowing us to drive GPV within our model again because we know this customer.
How do you look at the relationship between you, the websites that you host that you have and also social platforms as they increasingly get into commerce. Is a website still going to be the primary digital platform in the age of social and in the age of AIA.
So for the entrepreneur, for the micro business, their ability to go across multiple platforms is just needed by them. They can't focus on just one platform.
So you're saying, yeah, they might have the TikTok shop or the Instagram, whatever it is, but they're also going to have their landing page that's hosted by you.
They're going to need their landing page because they're going to have to go to more platforms. And by the way, when they have their own website landing page, they can use that data to determine where they want to go next, what is more profitable. Every social media platform is going to have their own metrics of how they sell. There's nobody out there on a platform that actually just gives them the data that they need in order to be successful.
And that's what we do and that's why we service this market.
Last question, what worries you when you look at the environment right now?
Yeah, so there's a lot of unpredictability out there. Now we have felt really good. We've been around for a while. We've been around for almost thirty years. We've gone through and cycles. Everyone is a little different, and we've been able to watch as entrepreneurs. Have you managed through this? We saw the financial crisis, We saw a lot of new business formations during the financial crisis of two thousand and eight, we saw unemployment go up at the same time.
This time, as we went through we didn't see unemployment go up as high. You know, you didn't see the same reaction. In the entrepreneurial business. Everything went fine, but everything has a reactionary difference as we go through different markets. And what worries me is making sure that we're watching all the signals to see how they may have a downstream impact and not just trying to focus on one
of the signals. And when you watch all of them, then you can start to pick up a little bit of Okay, how is this going to you know, hit that mom and pop shop down the block. They may you know, they may be able to hire somebody like they wanted to. Well maybe we can provide them a tool now that allows us to do that. So we feel we have to constantly be out there watching that market, feeling them, meeting the customers, seeing what's working for them,
and hearing them. So again, coming back to that, that relationship with that customer group becomes just very very important to us.
Yeah, that sounds certainly, especially with so much coming at business owners right now. It's a lot.
This was fun. Thank you, Thank you. This is great. Thank you for having me.
Yeah, thank you. Congratulations ten years company. Mark McCaffrey, all right, CFO of Go Daddy, joining us right here in studio.
Hey, let's get an update on everything happening after hours and how the market's closed. Here he is, Charlie Pellett.