Why didn’t GoDaddy acquire Fone.Do?

GoDaddy - Step 4

Yesterday GoDaddy announced that they are acquiring the Hosted PBX provider FreedomVoice for $47m. Over the past year, GoDaddy met with many companies in the Hosted PBX space including us in their search for an ultimate phone solution for their customers. See below part of  our well received PPT  that we presented to GoDaddy.

Before I explain why they picked FreedomVoice and not Fone.Do (even though our technology is much more advanced), we need to understand more about GoDaddy and their customer base.  (BTW, everything I will write in this post, is based on publicly available information). As my friend the telecom analyst Peter Radizeski commented yesterday:

This line in the press release cracks me up: “GoDaddy has 14 million customers and many of them have struggled to find affordable and simple telephony solutions,” said Steven Aldrich, Chief Product Officer, GoDaddy. Really? There are approximately 2000 Hosted VoIP providers in the US. You can’t get away from the adds from 8×8, RC, Vonage, MegaPath and others, so if GoDaddy’s customers are struggling, well, that says something about the perception GoDaddy has of their customers.

Actually, when you look at who GoDaddy customers are, the PR is understandable. GoDaddy define their customers as VSBs (Very Small Businesses) with 1-5 employees with the majority being 1 man businesses. Some like to classify their typical customer as a One person, non-tech, business owner (usually female) who lives in the “flyover states”. As they explain in their annual report, GoDaddy sees their mission as supplying the Digital Identity to their customers. Until now this identity included 3 components – Domain, Email and WebSite. Recently they made a strategic decision to make a phone service the 4th component. In the slide at the top of this post you can see our mockup where we showed our vision of this 4th component.

GoDaddy understands that phone service is no longer a separate service from other digital services. More-so in this age of WebRTC, voice (and video) communications are integrated web services that are just another application in our digital life. I think we expressed this vision very well in these slides that we presented to GoDaddy in our first meeting a few months ago. If you read the GoDaddy PR, I think you can see traces of our vision in their future plans…

So why did they pick FreedomVoice and not Fone.Do? Well, historically Godaddy acquires businesses with a medium size customer base which they can grow and integrate into their existing product line. So, though we were probably a closer fit for GoDaddy, they preferred an established company and not a startup. Though, if I was them I would have preferred a solution with a better suited solution for the future of communications.

What did I learn from this experience? That in the future, we will see communication services integrated in every web application. That is where we are going and that is why we are such strong supporters of WebRTC!