Looking back on his days with GoDaddy, Sam Kemp recalls a pivotal page in the domain registry giant’s strategic M&A playbook.
As he prepared to present to the executive team his analysis of a recent acquisition, he included a simple slide to convey data that would challenge the company’s conventional thinking around acquisitions and how—free from the limitations of this thinking—GoDaddy’s newest acquisition could serve as a strategic lever for the company at large.
This driver, Kemp tells us, would challenge the high regard in which GoDaddy’s management team held new “profit pools” and the transactions that triggered them.Read More
Recalls Kemp: “We decided to do a very counterintuitive thing: to not have a profit pool for the latest acquisition—in order to achieve faster adoption vis-à-vis price competition—and instead to use it to establish profit pools inside other categories that were related to it. This turned out to be a very successful strategy, and something that scaled really nicely.”
As the somewhat revolutionary slide illuminated the room, a collective focus sharpened among those at the table. Kemp then explained how the strategy would no longer be about short-term gains but about leveraging the acquisition to expand the company’s presence and to push profit pools into other connected categories.
For Kemp, who had been appointed chief strategy officer after a stint running Investor relations, the gathering became a moment when strategy and numbers intertwined to offer a clear vision of how to move into the future. Going forward, GoDaddy management became dedicated to the idea that M&A was about not just making an acquisition work financially but also integrating it into a broader strategic framework that would enable the company to capture more significant market opportunities.
Adds Kemp: “This slide, in this very simple format, was simply able to crystallize our perspective with regard to how we wanted to move forward as a business.” –Jack Sweeney
Made Possible By
CFOTL: Tell us about Built … what does this company do, and what are its offerings today?
Kemp: Built Technologies is one of the fastest-growing construction and real estate technology companies. What we do is really to service construction lenders and their ability to manage individual loans and portfolios of loans that have to do with financing assets that don’t yet exist—which is a very complex thing.
If you think about how you get your home mortgage, you realize that hopefully it was a very simple process. When you are doing construction debt, though—and in particular when you’re doing construction debt for things like commercial real estate and home builder finance—you’re talking about assets and instruments that are very, very complex. You have things like inspections and title searches and proving that you’ve made progress in building the asset for which you’ve said that you are actually using the funds. You have complex capital stacks, all sorts of things.Read More
For most lenders, managing these loans is a a very cumbersome and operationally intensive process. You have not only regulatory obligations bus also portfolio and risk management concerns. We make software that makes it easier for lenders to manage all of these things. Most of them experience dramatically faster drop turnaround times and an increased ability to have more loan administrators manage more loans—which in turn allows them to do the thing that they’re really differentiated in, which is being out in the market to engage developers and real estate owners so that they can maximize their ability to put capital to work.
This is how we started as a business. Increasingly, though, what we’ve been doing over time is to use this position to try to solve other problems in the ecosystem. If you’re familiar at all with the construction space, you know that it is a very, very manual, low-digitization space. It’s the second-least digitized space out there, right after agriculture. The U.S. federal government is more digitized than construction is today. When you consider what solving these problems would actually mean, you end up realizing that you actually would be solving problems for all kinds of people—like general contractors, subcontractors, suppliers, folks at the very end of the value chain—who all often tend to have issues around capital flows because they are waiting for funds to flow all the way down the stack to them. At Built, our goal continues to be to make it easier for the financials to flow throughout the entire life cycle of a project. jb