Inside Go Daddy’s Acquisition of Afternic – An interview With Kelly Conlin, Chairman and CEO of NameMedia

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.

Morgan LintonMorgan: Can you tell us a bit about how this deal got started?

Kelly Conlin AfternicKelly: 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 Linton

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 Conlin AfternicKelly: 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 Linton

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 Conlin Afternic

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 Linton

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 Conlin Afternic

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 Linton

Morgan: Last but not least, how do you think this will change the company culture at Afternic?

Kelly Conlin 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.

{ 2 comments… add one }

  • Nick September 26, 2013, 10:57 am

    Maybe someone can ask him why they still allow dead-bead buyers to exist. Its 2013 and the domain industry STILL allows people to bid on domain names and never pay, even though they agree to enter into a legally binding purchase contract…

    The physical real-estate industry doesnt put up with that sort of behavior and by now the domain industry shouldnt either. Its a real black eye on the industry. I have been burned many dozens of times and know others in the same boat. It plain old should not happen anymore.

    But none of these places wish to do anything about it… Go Daddy AND Afternic alike. That is why I will never sell a domain with them again. I know others feel the same way. That amounts to lost business and bad publicity for those guys but I see they’re happy in bed now.

    Reply
  • Joe September 26, 2013, 2:26 pm

    Regarding the comment @ Nick I totally agree on several points.
    In my position as the write a review about this same matter Domain Name Ware , I think Godaddy want to be the owner and industira total market domain , remember to be a partner with Sedo and have a contract for all domain names for sale and to patronize Goddady these have more than 40 % of the amount of the sale .

    This to me I think it’s a system that happens to be abusive, in my opinion I think all this come to seize total power industry and domain name market and I also think that the other ICANN accredited registrars and members of other direct and indirect businesses and the associations of everything related to this market directly or indirectly, a commission should meet to safeguard the abusive and disproportionate way to make this company the first in everything from the best patents are not as worked the filtering Trademark particularly with the new gTLDs .

    Respect responses that Network Solutions will agree , particularly coming from this company a pioneer in domain name registrations and now unknown since their provocations irrelevant to its customers take their toll, which use or used a patent scam , also brainstorming Godaddy is Bob .

    Afternic think eventually lose market and we realize that many Godaddy do the same with Sedo and other companies of which he is the majority shareholder .

    On the internet you can find and learn more unexpected if you know what good writing a sentence, which give at a time in a solution that can be surprising and afford.

    Lerman Brothers was a reality in the memory , Godaddy may be worse to a reality that happen in the past , no matter the color or ideology, passes and moves around a large market and ruins , this is what is now on a morning very possible, have the worst Godaddy psychology itself as a company.

    Reply

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