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Hello and welcome to Decoder. I'm Eli Patel, Editor-in-Chief of The Verge, and Decoder is my show about big ideas and other problems. Today's episode is a little different. I'm talking with GoDaddy CEO Aman Bhutani. But we taped this one live on stage last week at an event hosted by Alex Partners in Palo Alto. So you'll hear the audience in the background. It was a pretty good vibe.
GoDaddy is one of those companies that feels tied to an earlier era. The company had a hugely controversial reputation in the Web 1.0 days when it built a big business selling domain names and ran a bunch of pretty sexist ads. But all of that is long in the past. The company still runs a huge domain name business, but Amon's been CEO since 2019, and he's been building out what he calls adjacencies, basically helping the very small businesses that run websites on GoDaddy grow their operations.
You'll hear him talk about a barbershop owner that runs a couple sites as one of his biggest customers, one he personally handled the customer service call for. If you've been listening to Decoder, you know that the business of the web has really changed in the past few years. The walled garden social network era really took over in the past decade. And now huge changes to Google search and the addition of generative AI have put a massive strain.
on the very foundations of the open web. So I wanted to ask Amon the question I've asked so many other guests on Decoder this past year. What's the point of a website in 2024? Why start one? Who needs one? And how do those people benefit from having GoDaddy host it for them?
Iman's answer here was fascinating. You'll hear him say that websites convey legitimacy, that GoDaddy's customers feel pride in having their own domains, something they own and control themselves. It allows them to build a direct relationship with their customers.
instead of relying entirely on other platforms like TikTok and Instagram. That's a pretty familiar decoder theme, and it was fascinating to dive into it with Aman at the micro scale of GoDaddy's customers. You'll also hear us talk about AI, of course. Earlier this year, GoDaddy launched a service it calls Arrow, which allows site owners to generate everything from logos to full site designs with just a few prompts.
That's a big idea, and it's something GoDaddy's competitors are doing as well. I've talked to the heads of both Squarespace and Wix in the past year, and they're also chasing AI-powered web design. But I wanted to ask him on about the economics of these AI tools, whether they were actually making money for GoDaddy, and if he thought a flood of AI content would change the web for better or worse.
And then, because we were live, I asked the audience to chime in as well. They had some smart questions at the end that I think you'll really enjoy. Okay, Iman Bhutani, CEO of GoDaddy, live on stage. Here we go. Aman Bhutani, you are the CEO of GoDaddy. Welcome to Decoder. Thanks for having me. You have been the CEO of GoDaddy since 2019. I think a lot of things have happened since 2019. Just a few, yeah. Do you think you still have the same job you signed up for in 2019?
I have not just the same job. I have way more to do than I did in 2019 because I think COVID changed things and the company changed and now we have so many more opportunities, so much more to do. Even more. One theme that we've been thinking about a lot at The Verge is the internet feels like it is on the precipice of major change. AI has changed our distribution networks. Search might be changing in huge ways. The way we bring traffic to websites might change. The creator economy might have...
flipped the very idea of needing websites upside down entirely. How do you see GoDaddy's business now? Are we still in the business of websites or is it something bigger than that? You know, at GoDaddy, of course, we're known as the... to the world as the largest domain registrar. And when I came to GoDaddy, it was still mostly a domain registrar and a hosting company. And of course, hosting changed in a very big way too with cloud and other providers. And me coming in, the idea very much was...
that it's great to be the largest domains player. It's great to be the first company people think of when they have an idea, because when you have an idea, what do you want to do? You want to lock that name down. there's so much more we can do with that so we should go into adjacencies we should find the things that our brand has a right to sell to our customers and by the way our customer is the micro business this is the very very small business you know
If you get to companies with 10 employees, you've already traversed more than 90% of GoDaddy's 21 million paying customers. So it's mostly very, very small businesses. And what are the needs that these folks have? And do they want those from us? is that...
our customers had identity needs, and not identity as their personal identity, but how they show up to the world. They had needs around their presence, whether it was in-store or online, and that's where websites come in. And they had commerce needs more and more. So today, GoDaddy has...
grown a segment that we call applications and commerce that is entirely around these new businesses that we've built. And that's taken us sort of from, let's say, the chapter one of the company to writing chapter two of the company, right? And yes, the internet's going to change.
I think AI will change a lot of things. But websites are as important to our customers today as they were 20 years ago. All right, hold on to that. I'm going to hold you to that. I'm going to come back to that idea a lot. One of the things I think about a lot is why you would start a website.
So if I'm, you know, and I'm in media, so if I was to start The Verge today, I might just start a YouTube channel or I might just start a TikTok channel. If I'm a small business, one of my favorite kinds of TikTok is small business TikTok.
I'm deep into the pressure washing community. I don't know if you people have understood. Pressure washing TikTok is one of the most calming things you can encounter. I've gotten my house pressure washed in a number of times needlessly now because it's so good. I own a pressure washer. That's a kind of direct marketing that's very cheap. It's very effective. It's very human. And it seems like that community isn't.
racing to go set up hosting and racing to go have a website. What's the thing that tips people over into, Oh, I should actually go away from these platforms. The audience is built in to, I need to run something of my own. Yeah, so I think the platforms are fantastic. I think thanks to these platforms, these micro-businesses, your pressure-washing community can not only meet and talk on their Usenet group, they can share videos, they can transact.
They can reach people who have interest. They reached you, which would have been impossible in the past. So I think it's really good. What I don't see is... That removing the need for them to have their own website or their own space where they represent themselves in the best way that they can. And while they may not be racing, as you say, I think what we do find, and I talk to our customers.
regular basis, they build their website for many reasons. They might build their website because they want to have a place where once they reach someone on a platform, They want to be able to direct them to something that they own and they create where they have a full representation of themselves. It may be to accept a bill as well. It might be a payment. It just might be all everything in my art gallery. One of the customers I talked to, she has an art gallery.
She does it for a very sort of specific group of people. And she put it online and brought her a ton of traffic. It brought her people coming to her studio that she'd never seen before. And I tell you so many of those stories.
What you'll find is that those websites give these micro-businesses legitimacy, right? In fact, there's a stat, and I think we're going to release it. It's from one of our recent surveys, where even in the sort of millennial or Gen Z generation, Four out of five people are marking surveys and saying, before I buy something from a small business, I go check their website first.
Because I just want to know that they're legit. I check the reviews because I just want to know that they're legit. And those things really allow a person who just is a solopreneur and just started their business. sort of reach people in a manner that sort of is not just good and positive, where they have a chance to compete with the big player. But it goes further. If you really want to step behind, and I don't know if people in this group have run.
A micro business where somebody in your family just sells jewelry online, you know, GoDaddy's average customer sells like $100,000 a year on one of our systems. That's really not much, right? That's very small in the small. But when you talk to them. It's not just that the website gives their business legitimacy. It makes them feel more confident. And that actually is the number one thing. If you're a solopreneur, the number one thing that's going to make...
take you from there to hiring your first employee to being successful is that you have the confidence to get through the tough times. And looking at that website, building that website for many people makes them feel more confident about what they're doing. And that's something. I was looking at your last earnings, and it seems like the total number of domains you're servicing is reasonably flat, but then the revenue inside of those customers is growing. So you're providing more services to...
basically a neutral amount of people. Yeah, the approach we took over the last year is that we had gone into a lot of businesses and were growing the customer count significantly. But GoDaddy had also done some acquisitions that... had set a customer attached to it, right, in different parts of the world. Five years ago when I joined, my vision was that we wanted to grow into adjacency.
The revenue is going up because we're big in the productivity solutions. We're big in websites. We have commerce offerings. And those are the businesses that have grown very fast, right? The core, what we call the core business, which is the older business grew low single digits. The new businesses grew 20%. That's where you're seeing the growth. But while we see that growth, we also have a strategic imperative to divest.
And end of life, some older platforms. And that's been a headwind for us, you know, not just on customer count, on revenue as well, right? We actually shared with the street that over the last couple of years, we had a point. to two points of headwind on revenue, just with the divestitures and what we chose to shut down. But I fundamentally believe that us focusing the company...
We're not a very large company, right? We're four plus billion in revenue. We're about 6,000 people. We need to make sure our people are working on the most important things. And if that means that we need to divest certain pieces or just end of life and... Reach out to a set of customers and say, look, we just don't do this anymore. That's what we need to do. And you see that pressure in our numbers. The idea that...
You're going to provide more services to a set of customers. Well, we'll add more customers once we get past this headwind. Well, the reason I bring it up that way is I've talked to a number of companies who are nominally your competitors. Squarespace has been on Decoder. Wix has been on Decoder.
companies that even aren't nominally your competitors. We just had Intuit on. And all of them are kind of in the same space, which is, okay, you have a site. Now we're going to use your site to take over your back office. I think the canonical example is you have a yoga studio or some, you're a personal trainer and you need to do scheduling. And so the front end of your website needs a scheduling functionality, which means I need a backend scheduling functionality, which means I.
need a billing system. And now you probably need an account management system or a sales management system. And we're just going to build all that for you. And you've gone from I set up a Squarespace website to my entire back office is run by Squarespace. It feels like you're headed in that direction, right? You have a number of these services.
that you could offer. Where does that stop for you or do you see more growth there? Yeah, I think we're squarely focused on what our customers continually tell us is their number one priority and what they want from us, which is how do they...
work better with their customers. So our tools actually don't go into the back office at all. That may be the strategy for some other companies. If you look back at GoDaddy five years ago, GoDaddy had this model, which is called Dream, Create, Grow, Manage.
And one of the first thing I did, I said, no, we're just going to do dream, create and grow. We're not going to do manage. And we actually, the company had bought a company or two and we had a set of products and we end of life to all of those and got out of those businesses because. Really, what our customers want from us, where we have the right to win, is in the early phase.
For this customer, it's how they engage with their customers. It's not in the back office. And yes, over time, maybe that'll be a partnership opportunity for us. Because like you're saying, we have a certain relationship and we can expand it. We can look at that. But strategically, we're very much... focused on what we believe is their number one opportunity, which is how they better serve their customers and what they want from us, which is the tools that allow them to do that.
There's two themes I want to pick up on there. One is around AI and one is... about just growth generally. But I think you've brought up the size of the company and some decisions you've made. So I want to start with the decoder questions, which are a gimme. This is just LinkedIn, thankfulness or bait. So get ready. You said 6,000 people? 6,000 employees, yeah. 6,000 people, 4 billion in revenue. How are you structured?
So at GoDaddy, we have a picture that looks like a house, and it's the operating structure of the company. It's part of what we call our operating model. So imagine a picture where, just like a kid would draw a house, you have the roof, and it has two slanting ends.
And that represents our brand. And that's a strategic change five years ago where I said, look, all things are going to come in to the GoDaddy brand, which serves this customer. We can grow the brand to serve more customers, but we're not going to go out and be a house of brands.
And the company had done an acquisition to sort of pursue that. I said, none of that. We're going to be very focused. So that's the roof. Under the roof, imagine a few rectangles that we call rooms. Each of those rooms is what we call customer-backed. So the entire operating model is what we call customer back.
Each room serves a certain customer population, and those are our business units. So at GoDaddy, you don't have a business unit that delivers a product. You have a business unit that serves a particular customer base. For example, you have an independent customer. This is a customer that wants to do things themselves. There's a business unit whose entire job is to do the product go-to-market P&L management technology for that customer.
So you have five rooms under that roof. Below that, we have a set of horizontals, which are the platforms across the company. And the first one is our care platform. This is what most companies call call center, but we call it care. We don't believe we're a call center. We don't believe we have.
Call center agents, we have guides. We have care and guides. Their number one metric to hit is NPS, not a cost function. Under care, we have marketing, which is not... the marketing decisions for the customer population, it's the mechanics of marketing that you don't want.
five rooms fighting for their own Twitter accounts or SEM accounts. You want that executed in one place. So that part is centralized. You have the corporate technology, the CTO group, which is like e-commerce, data science, the data platform. those pieces that are shared across the company, and then the corporate platform, which is legal, HR, and finance. So that picture is something of, you know,
I drew probably five years ago when I joined, and every leader in the company knows that picture. The board sees that picture. It's called a house. That is foundational to our operating model, and it defines the structure. It also defines how different teams engage with each other.
If you're a room, if you're a vertical, you have a P&L and you behave a certain way. If you're a horizontal, you have a way that you engage with the five verticals to simplify and be able to move fast while you centralize certain things. My joke on a coder is if you tell me your org chart, I can name 85% of your problems. That's probably true. It's also true for code.
When I used to take over teams, that's one of the things my bosses love to do is just that's how my career grew. I would take over teams. And they'd always ask me, what do you want to do when you're taking over this tech team? I said, just send me two things. Send me the last annual HR report.
Every person, what raise you gave them all the money for everyone. What do they get? And send me a link to the code base. Because if your code is structured a certain way, I can tell you which two leaders don't work well with each other. Everything about it. Your code base actually tells you. And it's Conway's law. Conway's law says that the structure and organization is the function of the relationship of the organization that design it. So it's absolutely true. Your org chart should tell you.
or your operating model, not just your org chart. Because you want org chart, you want accountability structure, you want culture, you want your op max, you want a few things. If you have the operating model, if it doesn't tell you 80% plus, you basically don't have an operating model. Yeah. People are just making shit up then. They just work however they work. All right. So instead of me guessing your trade-offs, you tell me, what trade-offs do you think you bought with the room's structure?
So the biggest thing about our structure is by building a customer-backed model that goes into the same brand, we have dedicated people that focus on solving a certain customer's problem. Because as the company grows and addresses the needs of different types of customers, the same...
can't really, at the same leadership table, divert their attention to two different customers. The people in the company, and because we're the world's largest domain player, this is a bit of a niche thing, but we serve the largest group of domain investors in the world.
The people who serve independents should not be thinking about doing investors. That should not happen. And that's what the operating model does. It puts the customer population first and then the business unit. And then the business unit worries about the go-to-market, the product, the P&L.
and so on. So that's the positive part. The trade-off is that anytime you have a many-to-one relationship, you're going to have some friction, you're going to have some prioritization conflict, you're going to have people saying, I'm not getting my part enough because I have to depend on somebody to get. And the horizontals that we have, especially as you get lower down into the tech platform or the marketing.
It works in an accelerator brake model. The business unit wants to spend as much as possible, as quickly as possible for their customer. But now they have to talk to a CMO who says, hey, wait a minute, actually, this other business unit... will get a much better return on this investment. So why are you getting this? Somebody else should get it. That same marketing team that was the break on the business unit.
is an accelerator because marketers want to spend as much as possible, but then you've got the tech organization under it that says, hey, here's the media mix model. It runs on ML, and here's what it's saying. Here's the returns. You want to spend in this channel.
What actually the data says you should spend on this other one. So you have this accelerator brake model through the structure. And that causes what a lot of people call pain in the organization. I call it pressure. I say, look, if it's pain, bring it to me and I will.
help you resolve it. If it's pressure, just realize that it's designed to do that. If you feel pressure talking to the other tier, it was built that way because you want the accelerator brake model. Cars run better with an accelerator and a brake. So inside of that, that's fairly common. We were joking before that I'm a journalist. I just spend money. I don't make a dime. That's one of the great perks of being on the editorial side of the house. But what you find often is...
Those models don't have risk, like priced into them. If I take a riskier bet, I might get an outsized return. But inside of that... it's hard to quantify the risk. It's hard to say, okay, there's actual real growth here, but we have to stop doing this. So we can use AI as an example. We're going to forward invest a bunch into AI because we think that's really useful and everyone's talking about it. But actually, if you look at the...
whole of the AI industry right now. No one knows how this is going to make us some money at the scale that the investment is currently driving. How do you think about putting risk into them all? So the way I think about... this exact comment about risk is that I think it's a function of who is in the room when the decision is made.
And the challenge, and this is one of the reasons I don't use the operating model that's fully functional. I think if you have a lead, and it works great for many companies, it just happens to be that. I prefer a different or what we have works for us well. But in the functional structure, you end up at the CEO table.
People who are leading a lot of corporate functions. So let's say that you have somebody that's chief revenue officer, somebody that's CTO, somebody that's chief legal officer, chief people officer, chief risk officer, maybe. And I think the numbers matter.
If there are four corporate leaders in a room and two people that are accountable for what is the performance zone for the business and making money, you're going to end up with a lower risk decision making setup. Because those corporate leaders... It's designed to be in the productivity zone, and productivity zone's job is to reduce risk. So at GoDaddy, the leadership team is called the GoDaddy leadership team. It is specifically weighed where...
The leaders of the rooms, the verticals, the business unit leaders are part of the group. So in any room where we're making an assessment at my level on whether we should take a risk or not. In the number of people, there are more risk takers than not. Your CFO is always going to tell you to be more conservative. That's his job or her job. Your CLO is always going to do that. That is their job.
What I want to do is create an environment where I have the head of the independence business there, the head of the partners business there, the head of the commerce business there. And I'm there and the CEO is there. And now suddenly there's five, six, seven of us.
that want to lean in into the risks, that want to explore it. And of course, we can use our judgment and take a step back and say, maybe this is a risk we don't want to take. But we're not going to get stuck in a room where we're the minority, because then this majority will win.
And you don't want that. Business is about taking risks. It's about taking risks in a manner that's reasonable, that's thought out, that's backed by data, that's well understood. Or at least you're working hard to understand it as well as you can.
You just don't want to create the setup where that conversation doesn't happen. So this is the other big decoder question. How do you make decisions? What's your framework? So at the company, we have two large transformations over the last five years. The first is that... It's about evolving our software platform.
That's really about GoDaddy being a domains and hosting company and your margins when your domain player are your gross margins. But when you're a software player, you have much higher gross margins. So let's build software, which was a transition for the company. Your question is really about our second transformation, which we call that we make decisions based on evidence. So I'm a big believer in belief.
I want to believe in things that are not there yet, but I'm also equally big on the scientific method. The approach for us very much is, if you have an idea, I don't want to spend a lot of time talking about it. If it can be tested, just test it. Once you've tested it, there's a Slack channel at GoDaddy. You can just put it in GD experiments and anyone in the company can see it. You have the same thing that's now taught to first graders or kindergartners.
You have an observation of the world. You have a hypothesis you want to test. You have a test you've designed and you've got the result. When you run it, you put it there. If the data makes the decision, maybe 0.1% of the time we're going to go against it. But normally the data is leading us and the decision is delegated because the metrics... are clear, the prioritization is clear, how you track that metric is clear. In the 1% of times, let's say it's one-way doors, let's say
you need a HIPPO decision. HIPPO being highest paid person's opinion wins, right? It's kind of the anti in my mind of data-driven decisions. But if it has to be a HIPPO decision, well, then let's reduce that number to as small as possible. And then whoever's the best person to make it. If I'm the best person to make it, let it come to me. If the chief architect should make it, then he should make it. But you try to reduce those decisions to the fewest possible. Hopefully that helps.
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Welcome back. I spoke with Iman Bhutani, CEO of GoDaddy, live on stage last week. Right before the break, Iman was answering one of the big decoder questions, telling me how he makes decisions. That led us straight to one of the biggest themes of the year, AI. Again, the two decoder questions helped me figure out how to ask all the rest of the questions. So now I want to ask about AI. Okay.
If you all haven't seen the GoDaddy AI platform, it's called Arrow. I believe it can even fill out your LLC paperwork for you. It's getting there. You can get to like, I want to buy a domain all the way to like, I'm interfacing with the government to tell them I have a business.
It's a lot. We're doing quite a few tests in that area. You can set up the website for you. This is a big investment. Today, as we speak, we're competing with Satya Nadella, who's on stage at Microsoft Ignite, talking about scaling laws.
the big companies are telling me this is a platform shift. I don't really quite know what it means. I have some ideas. Do you see the scale of that investment, the decision to go after we're going to use generative AI to make things for our customers at the same scale?
return on investment as the big players are seeing? In our business, the piece we're really focused on is kind of that last mile on how generative AI adds value to our customer. One of the things we always say at the company is, yes, we are going to take some of the friction out for the customer to build something, but we're always going to make sure that the customer is in control of their brand.
That it's ultimately their decision. It shouldn't just automagically happen. It should happen magically and then they should decide whether they like it or edit it. And what we find is that for the customer that we have, they don't have copywriters. They were saying you started as a copywriter.
They don't have those people. They don't have lawyers to advise them. They don't have marketing people to advise them. They don't have a webmaster. So if Generative AI can start them off on an About Us page, that makes sense. Or give them an image for a logo that...
They're like, oh, this is pretty good and I'll customize it from here. That's a fantastic start because a lot of people are not going to start their side hustle or their micro business because even if they have a template and everything, when they actually have to choose the images or type in the text. They may not be as proficient in English, frankly, or they're just not able to bring it together. They're a really good plumber, just not so good at writing about how good a plumber they are.
If Gen AI can do that, I think it's a fantastic thing, right? We don't look weirdly at people who use calculators to do math, do we? And I think Gen AI does... That worked for text for our customers. I want to be 100% clear. My dad looked super weird at me when I used the calculator. But the question is, will you add your children? No. Well, there you go, then. But I guess that's the general AI case. I've heard that from everybody. I'm saying specifically for GoDaddy.
You had to invest in the Aero platform. Correct. And when I talk to the big companies, they're big investments in foundation models and H100s. It's hazy how you get from that to... What they think will happen. Is it hazy for you? We're going to invest in Arrow and that's going to drive growth? No. So Arrow...
The investment level in Aero is much smaller than building a $500 million model. It's nowhere near that, right? And because Aero is very, very close to the customer, within one year, we can test, 100 tests. to see whether it's actually creating value or not. And by the way, does it actually move customer willingness to pay or not? Because if you gave the customer something and they're not willing to pay more for it,
You didn't really meet a true need for the customer. Yeah, you gave something away and maybe some people use it. The real breakthroughs are when you create something, get the customer to use it, and they're actually willing to pay more for it. And we have that data, right? We are able to see that data in a year. In terms of the very large investments in AI, typically what I say to people is,
I remember when the internet came along and there were some very big companies putting cables all over the world. We're still using those cables. Even those companies went away. We're using that cable today. And they put in so much cable, they didn't imagine there was going to be video on the internet back. Or maybe they did imagine and invested really early. But I think that's the cycle of technology.
In many cases of technology, I don't know, from electricity to mobile phones to satellites to now AI and the internet, large investments have to be made to make it available to everyone. And then sometimes the usage comes over time. Whose models are you using for your AI products? The way we use it on our platform is that we have a single API that whether I want to write a review for my directs or...
GoDaddy's system is writing something for its customer. Every goes through one common set of APIs. It's easier to do moderation and things. And behind that API, all the models connected. So we have... a connection to OpenAI. We have a connection to Gemini. We have a connection to the Microsoft Azure version of OpenAI, right? And that allows us to do some testing at the API tier.
to see where we're getting a better response, and frankly, often a cheaper response that's just as good. Because we can pass signal to the API tier, and the API tier can decide, okay, I'm going to use this model instead of this one. Was the response just as good or not? Yeah.
Do those feel commodified to you? I've heard a lot of people say that the core model functionality is going to get commodified and prices will come down. They know something I don't know because I think it's too early to say. I think it's changing so fast, the new models. Even the 4.0 model, it's just different. It's different from what we expected. And I think the more you have intelligence and understanding, I think this is going to change a lot over the next year or two.
You're one of the few CEOs I talked to who's willing to put real price tags next to AI work. Do you see consumer price sensitivity? Like, I'll get you a better answer and then it'll cost you more money, or is it just AI? Yeah, no, there is consumer sensitivity, especially for our consumer.
You know, I'll tell you a quick story. The first customer I really talked to in depth was a HR person at a roofing company. Her husband had two barbershops and she was a webmaster. She was upset because her $200 a year subscription was now going to be increased. The Dreamweaver instance we supported for her that was end of life 15 years when I talked to her was not working anymore.
The reason she emailed me and called me was because that little delta in the air was a big deal for her. It was a huge deal. It may not, other people may say, what's $50 a year for this? customer, it was really a lot of money. So I would say the customers, the micro business customers, very, very sensitive. What I will tell you, we have a test right now where Aero scans your website.
and tells you what you should change in that website. It'll do it for you too, but you can do it manually yourself. Then this is on managed WordPress and it tells you how to improve your SEO.
or improve your labeling, improve your navigation, improve your content, make your pictures lighter so it loads faster. It will go through your site and give you the top recommendation and order them. And we have a price tag on that right now that's being A-B tested. And I would tell you so far, the signal is...
And that's just one of many paywalls we're testing right now, where it's real AI functionality that has a real price tag. And look, not everyone's going to pay for it. So we're going to have to find some balance of giving enough for free. that everyone values it and holding something really important back that the percentage that's willing to pay for it pays for it and we can value-based price that and make it work for everyone.
I warned you that this would be a therapy session for me about the web before we started. You brought up Google. This is where I think I have existential fears. about the internet that we live in. And what I specifically mean is the idea that you can do automated SEO implies, one, that there's a right answer to SEO problems. It's not automated. It's a suggestion, sure, that Google is static, which it is not, and that Google's
search will continue to be a reliable source of traffic over the long term. And all of those things seem very – like Google – will Google be a going concern in the Trump 2 administration? It's like a little bit up in the air, right? Like that's –
I think it was yesterday the Department of Justice is like, we're going to make you sell Chrome. Chrome, I saw that. Would you buy Chrome? I probably couldn't afford it. The guy from Rumble is like, I'll buy Chrome. I mean, it's over market. I think – So a little bit, let me bring you to that example I took since you talked about the tool we just launched.
You know, you may not be a technologist. By the way, lawyers are like coders. Contracts are sort of like... Owned on my own show. Yeah. You are. And so there's a logic... mindset to it. And you're absolutely right that those things in Google and search is changing. But you are a very sophisticated person when it comes to understanding that those things are changing. I'm talking about a customer that builds a website, sells
pressure washers, but does not put the word pressure wash in the title or the H1 tag. If you know coding, those are really important if you want to rank. That's no secret. That's not exposing some secret Google algorithm. Let me just ask you this. This is the fight. There's that, right? That's some SEO that people understand. These micro-businesses, these folks don't know the basics. But the idea that the internet will be full of... AI generated content that will go into LLM training data.
and that our search behaviors will change because OpenAI will just tell us the answer in search GPT, or Gemini will just tell us the answer. It's trying. There's an incredible pressure on the very notion that actually... those platforms will continue to send traffic to websites, as opposed to all of our app-end marketing is on video platforms, and the last step is you come to my website to convert. Yeah, so I worked in another business where the large platform companies, including...
Google are very large. And the hypothesis has existed for over a decade that the large platform companies will continue to take more and more of the traffic which they have, it's true, or the data suggests so.
And that it will lead to fewer websites or fewer domains and so on. And that will be a loss for the open and free internet. That will be a big loss because the internet was built around this idea that anywhere in the world, of course, if you're not on the Great Firewall or something, but anywhere in the world.
You can reach any piece of information in the world in a very, very flat manner. You just have to type a URL and HTTP takes care of it. It's amazing. It's unbelievable what happens on the internet, right? My fundamental belief, and maybe I want to believe it rather than prove it. My fundamental belief is that AI can generate data, platforms can keep trying to take more and more of the data, and they're definitely creating supply and demand. It's not like they're just...
eating everything. They're creating the supply too. They're creating content that lead to people using a lot of data or bandwidth. But my fundamental belief is that the more AI grows in that, the more important your words. are going to be on the verge because you are involved with it. And no AI is doing what you're doing. And the same thing is true for our customer. If you look at the micro businesses, if a mom decides to sell jewelry online,
Believe me, I can't do anything too exciting about it. Maybe give the mom a few ideas on how to structure it. But that is a real business. It may put food on the table. It might just give her joy and satisfaction in life. But that's a real thing. And I think it's very hard to replace that. And I think it's only going to make it more popular. We have a PR line at GoDaddy. I'm going to mess this up because I didn't read it carefully enough. But it says something like, welcome to the...
smallest Black Friday ever. Because this Black Friday, our services show that more customers in the US want to buy from small businesses. In fact, and get this, they're willing to pay more to buy from a small business than buy it from the big business. You don't hear that very often. But this year in Black Friday, that's what consumers are saying. So I think the more...
You see this data, you see this AI, the more important is going to be what the human element is. And I want to believe that, and I do believe that. When you look across all of your customers, is Google still by far the largest referrer of traffic? Google is, between Google search and YouTube is very large for traffic. I think social is continuing to grow for sure. But I think Google still has the dominant position. Yeah. Just this week, I think Blue Sky.
It's growing. I think right before we started talking, they hit 20 million users. It's not a lot compared to threads at 275 and Twitter at 300 and then Facebook, TikTok. One of their differentiators is they don't suppress content with links in it. They're very proud of this. Jay Graber was on Decoder. She's like, we are part of the web. We want this platform to feel like the web. Other platforms like Threads or TikTok or Instagram.
They don't allow links out, right? They're closed ecosystems. How do you think about, okay, we run a company. We want people to grow making websites, whether they're micro entrepreneurs or larger. But they're up against marketing channels that want to keep them inside of their ecosystems. Yeah, I think it's a fact of life. And what we tell customers all the time is that, yes, you should use the platforms to reach people and reach new people. But ultimately, you should bring them.
to whatever is your website or your experience or your store that you want because that allows you to do that. And the internet offers this amazing capability where now if I start... a brand, let's say it's the same example, homemade jewelry. If there are 100,000 people in the world out of seven plus billion who are interested in my jewelry, they can all reach me. through my website and transact with me. And technology allows us to do all of that. One person can run that whole thing.
And I think that's just continuing to happen. Yes, the platforms and many of them don't allow links out, but that need for the person buying to be able to see your full, like, you know, if I see an article from you on a platform, yes, it's interesting.
But if it engages me, then I want to see the full picture of what you've got to offer. And I'm going to get that on your website. And I will come, whether they link it or not. They can choose not to link it. I'll find it if I'm really interested. Yeah. We have to take another short break. We'll be back in just a minute. Support for this show comes from Elf Cosmetics.
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Right before the break, GoDaddy CEO Aman Bhutani and I were talking about why people make websites in 2024 and how AI fits into that. In a minute, you're going to hear him take some questions from our live audience. But first, I wanted to know, does AI actually make any money?
I've got a few more, and then we're going to take some questions from the room here. On AI, your investment in AI, is that paying off? Is that a positive ROI yet, or are you still investing? No, we're still in the investment cycle on Aero. We have really good early data. So we're going to continue to invest. In fact, I've publicly said in earnings calls that while we have significant monetization opportunities that are being tested, my primary metrics are discovery and engagement.
I want people to discover aero all over the world. I want them to have engagement with the different pieces of aero. It has a lot of different components in it. And those are the two primary metrics I'm focused on. And yes, we'll monetize as needed or as we see. And we did a three-year financial plan.
We did an investor day and we did that in February of 24. So it's not been a year yet. And in that financial plan, you'll hear me say there is no aero in this. There's zero dollars for aero in the three-year financial plan. There will be some return, but I didn't want to even have our CFO guide to it. When do you think that will change? Is it after three years? I think we're making good progress. It'll happen earlier.
Yeah, yeah. But when we did that presentation, things are changing so fast. Just between February and November, so much has changed in aero, like the take rate, the uptake, the engagement. Believe it or not, we've had 3 million people discover Aero. We've had over half of them engage with some part of Aero. As that engagement deepens, we know that leads to monetization. So I think it'll happen sooner, a bit sooner than we expected, but we're going to keep driving that discovery and engagement.
number. Is that based on a fixed cost estimate for how much the models will cost? Or are you expecting some variability there? It makes some assumptions on what the models will cost. But actually, unlike some other people, that's a bit of a smaller expense for us if you compare to others. And the reason is that we have a number of ML models. They're not gen AI models, but a number of ML models internally.
that do a lot of the heavy lifting on what Aero does. And we actually have tried very hard to minimize how much we would have to pay somebody else because I always remind the team, I tell everyone, I came to GoDaddy. ARPU was $167. We crossed $210 last quarter. In those $210, we got to pay the COGS. We got to pay our salaries. We got to market this product. We got to invest, and then we still got to have margin that starts with a three-handle.
So with a gross margin mid-60s and an operating margin with a three-handle, you don't have a lot. You've got to make every bit work. run some managed WordPress hosting, I believe? I do. Yes, we do. Do you know what's going on with WordPress right now? I am familiar with this, yes. I follow it closely, actually. How do you think that's going to resolve, right? This is like a big lawsuit.
Yeah, I don't know how the lawsuit is going to resolve, but I do understand why it happens. And I think you've got two big players in the WordPress space taking different positions, and it's got to play out over time. Which position are you going to take? Do you contribute back to the open source?
We do. We're actually, depending on how you count it, we're either the second largest contributor or third largest contributor. You can go to iForTheFuture and it's published data. You can look at it. So Matt's not going to yell at you. He hasn't so far. Okay. Very good. It could change. Yeah, if he's listening. He listens. All right. I think we can take some questions from the room.
Quick one. Over the years, GoDaddy has been innovating and really pushing the boundaries of what you offer and reinventing your offering over time. Do you have a sense that the pace of disruption and the required innovation that you need to be able to bring to market to stay competitive is becoming faster and faster to the point that it gets difficult for a single company to stay current and stay at the edge.
Yeah, I mean, if the question is, is the rate of innovation continuing to accelerate? I think it is. You know, there's this idea of gradually, then suddenly, and tech follows that cycle again and again. And the suddenly parts are getting steeper and steeper, right? OpenAI had more users faster than... the company before I don't know about any one company I think technology is moving so fast that it has a disruption cycle built into it I think at GoDaddy
We've worked very hard to make sure that we can enter new businesses and continue to grow the company. And that's worked really well for us the last few years. To the team, I often say that... You might have time. I have no time at all. I got to make everything happen now. But at the same time, for the right idea, I got all the time in the world.
And sometimes people say, why do you sometimes say you have no time and then say you have all the time in the world? So it depends on the context, doesn't it? Yeah. So now that you're moving into all of this adjacent white space, like you said, How do you compete against the likes of Shopify and all? Because they are coming at it from a different angle. And what's it that makes you unique and different as of now and kind of the plan ahead?
Yeah, you know, entering an adjacency, especially a large one that's growing fast, is always going to be difficult because it's crowded. It's not quite white space, right? There's a lot of players in it already. Our positioning is very, very clear on the commerce piece. actively market our commerce offering only to our existing base of customers. So that gives us a CAC advantage.
And it is literally built, designed, invested in with that view. We don't go out and try to tell the world that we have this offering. That would be prohibitive in terms of marketing. What that allows us to do is it allows us to build an offering. Of course, it's a multi-year journey to build a competitive commerce offering. It allows us to build it while maintaining a certain burn rate on it, but be able to get to scale because that's one of our competitive.
We have almost 21 million paying customers today. In that base are a lot of customers that want commerce. In that base are a lot of customers that happily take GoDaddy. We have good conversion rates on it. But you've got to find your angle, right? You've got to have angle or your view into it. Otherwise, it's just too hard. So when you started your conversation around Gen.ai, you said you mostly use Gen.ai to build something for your customers.
And then that kind of conversation shifted to margins and the financial plan. So have you evaluated areas within the organization where your cost to serve each customer can come down using Gen AI? Yeah, we have something called sort of the GoDaddy innovation model, which is based on, it's like a staircase. The idea is that everything we do starts out magical.
Some human knows how to do it, but none of us understand how it happens. So that's magic, basically. When it scales, you have to get it to be structured, which means it's going to be process-powered rather than human-powered. If you can do better with that, you're going to be automated, which means it's machine-powered.
And then the highest step in the staircase for us is that it's data powered, which we call it magical again. It's just AI magical. So a number of processes that the company actually... Even our corporate functions have targets to drive processes up the staircase and get to that level. The simple idea is that as you go up the staircase, you gather more differentiation, more scale.
more personalized experience, even for a process internally. So yeah, it's a big thing, whether it's in our care guides, you know, we have better and better tools for our care guides to be super guides, all the way to how we do our marketing, how we do our spend. how we price more and more driven by data. So, yeah. How do you think about customer success and customer retention, given the segment of the market you're focused on? So I'd love to hear your perspective on that. Yeah, I think...
People view this as a really tough customer retention or customer success vertical. We have a published retention rate for our customer that's 85%. And the way we think about it is that we really think about customer churn, not product churn.
Because in our customer base, you actually see people who tried a business, they got a domain name, it didn't work out. After nine months, 12 months, they need a new idea. They still got to put food on the table or they have the drive to do something. They're going to do something else. Are they doing it with GoDaddy?
We want to keep that engagement with them. One of the biggest things, I think a lot of businesses are not structured to provide a high level of care. It's sort of treated as a cost center. In our case...
The care organization is a true competitive differentiator. We call it guidance. So our care guides, yes, they have some targets for HT and stuff, but they don't have a script. They don't get told, ask the customer X, Y, or Z. right the goal is to first understand what the customer wants solve their problem and then we have sales motions to try to you know because we can end up spending a lot of time with a person serving them over the last five years
We don't talk about what our NPS, we have a transactional NPS in care, and it was very, very high. When I came from travel to GoDaddy, I was shocked. I was like, that transactional NPS, it's phenomenal. what I at that point called the call center. Today, we've publicly said that our transactional NPS and care is 65 plus. So we're one of those rare companies. If you have a problem, we're going to work very hard to fix it. And we're going to fix it.
a very very high percentage of the time and when we fix it a lot of customers become customers for life and then you get the lower churn rate out of that What did you do for the barbershop lady? What I did was I talked to her three times on the phone. She said, this is really nice to talk to us. You're a public company. I said, you're one of my biggest customers. You know how many people, like ARPU is 167. I'm asking you to pay 275 or whatever. I said, you're a big customer.
You get to talk to the CEO. She loved it. She talked to some of the tech folks. I asked her how she updates her website. I don't know if you know how old Dreamweaver is. It's been end of life for a very long time. Some designer developer built it for her. She would copy the new image to a certain folder.
rename it to the name that was in the code, refresh the site, and the new picture would get picked up. That's how she updated images. She didn't know how to change the code. And it took a couple of weeks, but we convinced her that she'd be much better off on a new platform. And she finally said, okay, I'm going to pay the $275.
You didn't give her a discount. The team might have. I didn't. I don't think I gave her a discount. That's great. What platform did you put her on? I think she actually went to one of the newer hosting platforms.
Yeah. It might have been manageable. No discount. All right. Hey, you know, sometimes there's a discount and sometimes there isn't a discount. That's how you get revenue and growth, everybody. No discounts. Come on. Thank you so much. This was amazing. Thank you very much. Thank you all. Thank you. I'd like to thank Iman for taking the time to speak with me and thank you for listening. I hope you enjoyed it.
If you'd like to let us know what you thought about this episode or really anything else, drop us a line. You can email us at decoder at theverge.com. We really do read all the emails. Or hit me up directly on threads. I'm at Reckless1280. I'm also on bluesky at reckless.bluesky.social. We also have a TikTok. Check it out.
DecoderPod. It's a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Decoder is a production of The Verge and part of the Vox Media Podcast Network. Our producers are Kate Cox and Nick Statt. This episode was edited by Travis Larchuk and Callie Wright. Our supervising producer is Liam James. The Decoder Music is by Breakmaster Cylinder. We'll see you next time.
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