The Case for Growth

25th February 2021

Russell Haworth

Russell Haworth
CEO (until March 2021)

On Monday, we issued the formal notice for an EGM to vote on a proposed resolution that would remove half of our board, including the entire executive team, without a workable alternative.  

While there are a number of issues at play in this debate, there is one that cuts across all of them: the question of growth. Should Nominet focus solely on managing .UK, confining itself to a one-dimensional existence? Or should it grow? 

Through careful study and consideration over many years, one Nominet board after another has consistently and unanimously determined that Nominet should aim to grow, and to do so in a way that does not compete with our members. The 2015 Lyons Report recognised both that a diversification strategy was consistent with Nominet’s founding principles and important to ensuring our future. Further, to address concerns from members, it suggested a competitive impact test should be used to evaluate new business opportunities so that we avoided competing with members. The board adopted this recommendation and has considered growth a priority ever since. 

Why do we need to grow? 

Without growth, we can’t continue to expand our public benefit contributions that are helping to address some of the most important digital issues facing young people today. This year we have committed £4 million, and we are targeting contribution levels of 10% of revenue in the future. But without growth, that amount will eventually stagnate.

The .UK namespace remains strong, but we operate in a mature and crowded market. While registrations have increased during the pandemic, that bucks the underlying trend, and we don’t know how long the bounce will last.  

Finding new opportunities in the registry business is increasingly hard, not least because we are naturally constricted bour commitment to work with, rather than compete with, members. 

Without long-term growth, the ability we have to invest in the myriad of ways we support our members, for example keeping .UK prominent in an increasingly crowded marketplace, will decline over time.   

Without growth, we can’t innovate, and innovation is essential if we are to be ready for new technologies and emerging threats. 

Without growth and innovation, we can’t keep our vital staff who connect more than 10 million .UK domains and maintain our service without disruption or downtime. 

Our amazing team have valuable, much sought after skills. To keep them – and attract new talent – we have to compensate them fairly, in line with the market. And our competitors for staff are the likes of Google and Facebook, plus every start-up in and around London. So we need to grow to cover those ever-increasing costs.  

We also need to give them space to develop their skills and grow in their professional lives. That means giving them the opportunity and environment to explore new ideas and to innovate. 

Most recently, our commitment to innovation yielded breakthroughs on DNS security innovation that protect networks from malware — ideas that were a direct extension of our core competency. Recognised by the UK Government, Nominet now operates some of the most advanced DNS defence technology in the world and was selected by the National Cyber Security Centre (NCSC) to protect the UK Government.  

Recently the NCSC extended Nominet’s protection, already in operation across 700 government bodies, to cover the National Health Service. Nominet also developed a ‘Digital Roaming’ application, which protects public sector workers who are working remotely. Overall, more than 2.8 million public sector workers are now covered by our technology. 

We think all of this progress is good for Nominet and for our members.  

We are now 40% below .com price levels. Growth means we will ultimately be able hold prices down in future. 

It means we can invest in the infrastructure and protecting against new threats. We will invest £20 million in the .UK registry over the next three years. 

It means we have a stable base to keep growing, to keep pursuing opportunities that build on our expertise, and doing that alongside an unstinting focus on our core .UK business. 

We believe that a responsible strategy that includes some growth is a prudent way forward. But we also acknowledge our members have a range of views. It is a topic that clearly requires careful thought and greater dialogue in the near future.

It’s vital that we find the common ground to set us up for success in the years ahead.  

By contrast, the EGM proposal to remove half the board threatens Nominet’s short-term stability and long-term health. 

We hope that you will join us in voting no on the proposed EGM resolution and keeping Nominet on the right track.