Thought Leaders in Corporate Innovation: Steven Aldrich, Chief Product Officer of GoDaddy (Part 6)

Sramana Mitra: Switching a bit, there’s a tremendous amount of innovation that you have to probably keep your eye on. The pace of startups has picked up tremendously. The number of companies that got seed-funded in 2013 was about 70,000. Since then, now there are 700,000 seed funds. These vary. Some are pre-seed, seed, post-seed, and pre-Series A. It’s a whole spectrum.

The number of companies getting seed funding is about 100,000 a year but the number of companies that actually get venture financing is only about 1,200 to 1,500. I imagine that for a company of the scale of GoDaddy, there’re a lot of opportunities to interface with the startup community out there that are innovating

 in related adjacent areas to you where you have to keep an eye out for what you want to acquire and what you want to invest in.

How do you do that? What are your thoughts and philosophies around that?

Steven Aldrich: That is a huge source of ideas. For us, it’s a way for other people to try things out and see what works. We do a few things. We’ve got a set of folks who are in our corporate and business development team who are constantly talking with both startup entrepreneurs. We make that a part of our day. We have conversations with those folks that we built relationships with over time.

We track some of the businesses for years and stay in touch with them. For folks further down the path in terms of scale, we might talk to folks in private equity as well. Then on the product side, the product management team thinks who would be the competitive set we want to keep an eye on and the potential funding announcements that come out around products and services in areas that are of interest to us. We pick up the phone or send an email. We try to make it pretty easy to find us.

If someone thinks they have an idea that’s relevant to GoDaddy, I don’t want them to jump through 17 hoops to share the idea. We want to make sure they can get to us. We also go to conferences. We try to be open. The volume of what’s happening in the world is so great. I’m sure we’re going to miss something. We attempt to be available and accessible so that ideas can get to us and we can have a discussion and learn what they’re learning.

Sramana Mitra: My observation on this topic is that for a company who’s on the acquiring end of the transaction, it’s most often the most advantageous to be able to identify companies that have not raised any money. If you can catch those guys, you get the best terms because there are no investors involved. If you give them a good deal, you can do a sub-$50 million acquisition. You get great talent without having to pay the premium.

Right now because it has become cheaper to do things, there are a lot of companies going very far in a bootstrapped mode. When I have these discussions with companies in your shoes, it’s not so easy to keep track of who they are and where they are.

Steven Aldrich: It could be someone’s full time job. That’s what venture capitalists are trying to do. It’s fantastic when we find a company that is really customer-centric and has developed a solution that is delightful and inspires customers to not only use the product to solve the core need but they also tell other people about it. We’ve been fortunate. We’ve acquired a few companies over the years.

One of the challenges of serving this audience of small business owners is, it’s really a challenge to go acquire small businesses. We were successful enough. We got 17 million of these folks.

Sramana Mitra: You do OEM deals or some sort of revenue-sharing partnerships as well.

Steven Aldrich: We do. We’ve built a program that’s very simple where we actually have an ad marketplace where we run different offers through placements inside of our products and we see what our customers are interested in. It allows us to, very quickly, get a read on different categories and different offers without have to build a product ourselves. We can quickly get a sense for demand.

Sramana Mitra: Very cool. This is a wonderful conversation. Thank you for your time.

This segment is part 6 in the series : Thought Leaders in Corporate Innovation: Steven Aldrich, Chief Product Officer of GoDaddy
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