Last week big news rocked the domain world, Go Daddy acquired Afternic. While we’ve all read the press release I wanted to go a step further and go deeper into the deal, how it started, and what this means for all of us who know and love Afternic and Go Daddy. I am incredibly honored to have had the opportunity to interview Kelly Conlin, the Chairman and CEO of NameMedia who took the time to take me (and you my readers) deeper into what is without a doubt one of the biggest deals the domain industry has ever seen.
Kelly: In many ways, this deal got started more than five years ago, when NameMedia first approached GoDaddy and other registrars to introduce premium domains from the aftermarket in their search results. We pioneered the concept of syndicating aftermarket domain inventory to the largest audience of potential domain buyers that come to registrars every day. We recognized that while domain investors have long believed that domains represent a new asset class and analogize domains to real estate or financial securities that will only be true if the industry has a platform with the transparency and liquidity that those other, more mature asset classes enjoy. If I own a share of stock, for example, there is a well-established mechanism for trading that stock—with the click of a mouse—on trusted platforms that aggregate buyers and sellers. The domain world was saddled with legacy platforms that can take days and sometimes weeks to negotiate, escrow, and close transactions.
Making that happen required the industry to move beyond a sales model that relies on waiting for buyers to find their way to the domain, or having a few salespeople working the phones. What would happen to Amazon if they put a “maybe for sale” link on every product and asked the buyer to send an email if they were interested in purchasing the product, and then sometimes responded, sometimes didn’t? Every day, millions of prospective buyers go to their favorite registrar looking for domains to register. If those buyers were presented with suggested names available on the secondary market at just this moment—the moment they are in the purchase path—and they were able to buy these secondary market names no differently than they can a primary market domain, then we have created the liquidity wanted by domain investors, and instant transactions wanted by domain buyers.
Building the platform to make this work required a substantial investment over many years to ensure ICANN-compliant forms of authorization, integrity of domain ownership, APIs between databases, cross-registrar cooperation and other requirements. Among other things, what GoDaddy has done with this transaction is provide its endorsement to NameMedia’s Afternic protocol for fulfilling this vision of a unified aftermarket between registrars and between buyers and sellers. This protocol now is now used exclusively by the majority of the registrars the world over and—importantly and critically, now the industry’s largest registrar in GoDaddy.
Morgan: At the end of the day these deals look like they happen all at once but I know it takes a long time to put these together. How long did it take from start to finish to negotiate this deal?
Kelly: When the new management team arrived at GoDaddy over a year ago, we had the opportunity to present our view of the domain aftermarket: in particular, the industry leadership needed to help institutionalize the domain aftermarket in the same fashion that exists for the primary market. The industry needed a “registry” of validated inventory to present to domain buyers in the same frictionless way that you can buy a primary domain. The GoDaddy team endorsed that view—and that led to discussions how to best implement that vision. Ultimately, GoDaddy decided that acquiring the platform, committing itself to using it, and making clear its intention to continue innovating the platform was the best way to achieve the best outcome for entire industry. That was the nature of the conversation over the past year.
Morgan: The #1 question most domain investors have is how this will impact their domains already for sale or parked with Afternic/SmartName. What impact do you foresee as a result of this deal?
Kelly: We ultimately hope this will lead to more opportunity to earn revenue for all of our customers!
First, Afternic will continue to operate as stand-alone site and Afternic customers can manage their portfolios directly at the Afternic.com control panel as they always have. Same for SmartName.
GoDaddy will be joining Afternic’s Fast Transfer network, meaning a seller’s domains will be available on a Fast Transfer basis to GoDaddy’s massive audience of customers seeking a domain. Likewise, domains listed at GoDaddy for sale will also be available on a Fast Transfer basis at any registrar that is part of the network. Fast Transfer domains enjoy by far the highest sales velocity so this should translate into incremental revenue for all members of Afternic.
Most important, GoDaddy is making this move as an endorsement of Afternic as the industry standard by which cross-registrar fulfillment of aftermarket transactions can occur. Afternic will operate as an industry utility. The adoption of—and investment in—this technology ensure that that the domain industry can reduce friction and increase velocity of aftermarket domain sales.
Morgan: What is the biggest challenge at the executive level when structuring a deal like this? What are a few of the things you really wanted to get right that kept you up at night?
Kelly: The two biggest challenges are ensuring that the employees understand, endorse and are on-board with the change. We’re pleased that the key managers who have been part of building Afternic are staying with the platform and will continue to work on building the network. Second, the network’s efficacy is a function of all the members of the network continuing to use the protocol as their way to manage the domain aftermarket. We were pleased that some of the largest registrars, such as Tucows.com, Register.com and Network Solutions.com, publicly endorsed this transaction as being positive for the industry, and since the announcement, we’ve been overwhelmed with positive reaction. So things look really positive for this to be terrific outcome for customers and for the industry.
Morgan: Last but not least, how do you think this will change the company culture at Afternic?
Kelly: Afternic’s culture during its ownership at NameMedia has been focused on growth: when NameMedia acquired the platform it had a few hundred thousand domains listed for sale and no partner network. Today, the platform has nearly six million domains listed, more than 100 partners in its network and a 95% market share when it comes registrars that have adopted Fast Transfer. We don’t see that changing with GoDaddy’s ownership: the entire team believes that the aftermarket could be a more significant part of the overall domain market and this move only makes that path more assured.