Two soon-to-be public companies aren’t necessarily good comps for each other.
Demand Media is getting ready to spin off its domain name business, Rightside. Competitor GoDaddy recently filed its S-1 for an initial public offering.
It might be tempting to compare the two companies. After all, both of them are prominent in the domain name space.
But when it comes to comps, Rightside and GoDaddy don’t match up. Here are some key distinctions between the two companies.
GoDaddy is a retailer, Rightside sells through middlemen.
GoDaddy primarily sells directly to the public. Rightside, through its eNom brand, sells domain names through resellers such as hosting companies. Rightside also owns retail brand Name.com, but it’s a small percentage of its sales.
While GoDaddy counts on millions of individual customers, Rightside depends on an army of resellers. When it rolls out new products, it has to convince each of its resellers to carry them. Rightside markets to a smaller group of customers than GoDaddy. That makes its marketing costs lower, but margins are squeezed as well.
Rightside is betting directly on new TLDs.
Before everything is said and done, Rightside will probably “own” about 50 top level domain names. These domains will be sold through its own channel as well as the registrar channel. This can be a high margin business.
The company will also provide the backend for hundreds more top level domains.
GoDaddy, on the other hand, is content with being the shelf space for these domain names.
Rightside’s topline has stopped growing. It’s banking on new TLDs for growth. GoDaddy is banking on growing its customer base and selling them more stuff.
Rightside is a big domainer.
Rightside owns 300,000+ second level domain names. GoDaddy has previously played this game, but it’s a small part of its business now.
If I could summarize the difference with one thought, it’s this: GoDaddy is a marketing company. Rightside is an infrastructure company.