You can’t say that success is going to David Brown’s head.
The chairman and CEO of Web.com Group Inc. has grown his company into a half-billion-a-year business. At a lunch meeting Thursday of the North Florida chapter of the Association for Corporate Growth, Brown said the secret to his success is not his keen business insights.
“We’re not that smart. We don’t have a great strategy. We’re opportunistic,” he said.
Web.com is a Jacksonville-based company that provides website development services for small businesses. The company has maintained a low profile until recently, and Brown said that has allowed the company to grow “without distraction.”
“Our secrecy in Jacksonville has been by design,” he said. “I’m gratified now to come out and tell the story myself.”
Web.com provides its services only to small businesses, helping them develop websites that attract customers and generate sales and leads.
The company will not go after big businesses or the consumer market, but Brown said Web.com has no altruistic mission to help the underdog.
“Nobody else is trying to help them. I want to dispel any rumors that we’re good guys,” he said.
“You have to understand that this [small business] is a hard market to reach,” he said. “It’s darn near impossible to make money serving them.”
Over the last two years, Web.com has grown from about $100 million in annual revenue to nearly $500 million after two major acquisitions of competitors, Register.com in 2010 and Network Solutions last year. Brown said the acquisitions give the company the size to be more profitable.
“With scale in a technology business, you generate a lot more profit,” he said.
Web.com has made a total of 11 acquisitions since it was formed 14 years ago. The acquisitions have brought expertise in certain areas and also brought more customers to Web.com.
Several hours after Brown’s talk, Web.com reported 2011 adjusted income from continuing operations of $35.3 million, or $1.05 a share, up from $18.4 million, or 68 cents, in 2010.
The title of Brown’s talk to the group was “M&A, the Web.com way” and he offered several tips for a successful acquisition strategy.
“One of our strategies is to know what assets you’re really buying,” he said. In Web.com’s case, the most important asset is people, since they have to provide service to customers in this business.
“Our customers view us as a technology company. We view ourselves as a service company,” Brown said.
He also said it’s important to keep employees informed about how they fit in after the merger. In the Network Solutions merger, all employees were told what their roles would be within two months.
“We are transparent in our communications,” Brown said. “People need to know where they stand and they need to know as quickly as possible.”
“One of my fundamental principles is respect for people,” he said.
Web.com can keep everyone informed because before a merger is announced, he said, the company already has a multi-year plan in place for how to handle the merged operations.
“We’re not winging it here,” Brown said.
He also said it’s important to like the people at the businesses you’re acquiring.
“Our lives are too short to hate going into work every day,” he said.
Although it has kept a low profile, Web.com made a splash last month with an announcement that it will create 200 more jobs in Jacksonville in the next two years. The company already employs about 450 people in the area and a total of about 1,700.
Brown said Web.com’s hiring strategy is not necessarily finding people who are already identified as the best and the brightest. The company’s human resources strategy is to hire people and find out what gifts they have.
“When we’re interviewing, we’re trying to figure out what is your talent,” he said.
That strategy goes well with the company’s “fundamental belief that we’re not that smart.” And Brown will acknowledge that he’s not perfect either.
“I’ve already made more mistakes than most people in the building,” he said.
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