What’s that? You think tech companies are overvalued. Well, don’t tell that to the folks who are about to fork over a cool $2.5 billion for GoDaddy.com, the site that registers domain names on the Internet. By RICHARD POPLAK.
Meet Danica Patrick. She’s an American beauty with chestnut hair that cascades merrily towards a voluminous chest. Patrick, who is by anyone’s standards a lovely looking lady, is what is known in certain circles as a “GoDaddy Girl”. This specialised occupation is defined, mostly, by wearing T-shirts emblazoned with the GoDaddy insignia and looking really, really hot. This, Patrick accomplishes with aplomb.
One stares into her eyes (no, really, one does) and hopes for her sake, and for the sake of her unborn children’s children’s children, that she holds some small equity in the company that she shills for so effectively. We have heard the stories about part-time masseuses at Google who were given stock in the early days, and now live the high life in Monaco. Could the same happen to Patrick? GoDaddy.com is, after all, on the cusp of selling for 2.5 billion smackeroos. Danica Patrick could soon be the magic combo – beautiful and rich.
Photo: Andretti Autosport driver Danica Patrick gets ready to get into her race car during the first day of the Indy Car Series practice at the Edmonton Indy, in Edmonton, Alberta, July 23, 2010. REUTERS/Todd Korol.
Certainly rich, but not at all beautiful, is GoDaddy CEO and founder Bob Parsons. Ol’ Bob is a showman, a used-car salesman who happens to sell domain names on the Internet. Turns out, domain names are still quite a business, and Bob has sold roughly 48 million of them. About the only thing on the Internet that generates constant revenue, domain names cost money to register and they cost money to stay registered. This is GoDaddy Group Inc’s. main line and it’s made them worth about as much as Burundi’s GDP.
But wait! Has it? Let’s do the math. Sadly, there’s no math to do, because GoDaddy, as a private entity, doesn’t have the same burden of disclosure as a public company. When Parsons and company brought on Qatalyst Partners late last year to primp the joint for sale, they were reportedly looking for more than a billion. Two-point-five billion is significantly more than one billion, which means Qatalyst Partners is exactly who you want to hire when you have something to sell. The suitors are Silver Lake and KKR Partners & Co., with some lesser investment coming in from a tech venture-capital firm called Technology Crossover Ventures.
The obvious question: Is GoDaddy massively overvalued? The company reportedly posted revenue of between $750 and $800 million in 2009, and it grows, customer-wise, by about 10% a year. That’s all anybody really knows. It certainly advertises with swagger. GoDaddy has become known for its sexy Super Bowl ads, which feature young ladies not unlike Patrick in a series of entertaining and rather revealing situations. Yes, it is a going concern, and it makes some noise on the telly. Ergo, it must be worth the money.
Photo: CEO and founder of GoDaddy.com Bob Parsons speaks during the Muhammad Ali Celebrity Fight Night awards banquet as former world heavyweight boxing champion Muhammad Ali (L) and his wife Lonnie Ali (2nd L) look on in Scottsdale, Arizona, March 19, 2011. The event raises money for the Muhammad Ali Parkinson Center and other charities. REUTERS/Joshua Lott.
Here, let’s pause for a moment and consider the tech bust in 1999. Oh, I know, GoDaddy has a proven track record and has been around for 14 years, it posts revenues, it advertises on television. In short, it’s a real company. But I’m talking about the pathology that existed during the first great tech crash, the idea that tech is sexy—Danica Patrick-sexy—regardless of whether there’s anything under the hood. (That metaphor is appropriate, because Patrick moonlights as a an Indie Car Series race driver.) Scads, gobs, universes of cash were thrown at companies that had their prospectuses drafted on the back of a serviette by drunken university kids, and no one asked any questions until it was too late. I’m not suggesting GoDaddy—or Facebook or Twitter or LinkedIn—are anywhere near as bad as that. But it does seem the same basic set of principles—which is to say, no principles at all—are being applied to the second round of the tech investment craze.
Watch: Super Bowl Go Daddy Commercial – Godaddy.com
Bob Parsons is a showman, a barker, and the loudest guy in the room. He sold GoDaddy to horny nerds who made it the go-to domain registration site, and he’s selling it again to the horny nerds at tech VC firms. It’s all about the flash, the dazzle, the razzmatazz. Remember those tasty sorority chicks in “The Social Network”? Is that your experience of the IT world? Didn’t think so. Guys like Parsons have spiked the punch, and have done so since the net’s early days. I’m not saying he doesn’t deserve his payday. I’m just not sure I’d be overjoyed if I was on the board at Silverlake or KKR.
As for Danica, no doubt she’ll get something of a pay raise herself. After all, GoDaddy is going to have to up its advertising if it hopes to make good on its promise. Instead of being hosed down, though I humbly suggest Patrick does what her boss and others like him have been doing to investors for years: Hose us down. There’d be a certain poetry in that. DM
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