October 7, 2020 | technology | No Comments
“We relay the story of Geico as we believe it shares some commonalities with GoDaddy, one of our most recent purchases. Like Geico, GoDaddy benefits from scale economics in a commodity industry. GoDaddy is the global leader in domain name registration with a market share of 22%, 2.5x its next largest competitor. Like Geico, GoDaddy’s markets can be characterized as having low barriers to entry but high barriers to scale. Growth beyond a certain scale requires greater data center capacity, robust customer service options, and enhanced analytics. Last, like Geico, GoDaddy benefits from a well-known brand name (81% brand awareness in the US according to BrandOutlook), lowering its customer acquisition costs.
Much like Geico, GoDaddy operates in a commodity industry generating 46% of its revenue from website domain name registration and 38% from website hosting. GoDaddy’s unit economics, however, are anything but commodity-like with a gross profit contribution per customer