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Squarespace’s Growth And Enduring Success

The web company continues to grow, but managed to bootstrap for a long time

12Apr

Squarespace has become one of the most important web design companies in the world today. Its core mantra is to ‘make beautiful products to help people with creative ideas succeed’, its core selling point is that it becomes simple to create a website that looks great.

The company currently has around 600 employees and millions of customers. In 2016, it recorded revenue of $200m and there are rumours flying around about a potential IPO in the near future. It has quietly become a huge player in the amateur web design space, allowing people with little to no experience of web design to create amazing websites that look like they cost thousands to create.

Part of the innovative thinking is a very hands off approach, with the company believing ‘in the power of the individual to create great things. This is what our product enables and our marketing celebrates.’ It essentially has several high-spec templates that can be used to create a website for a specific purpose or with a particular look, for instance a website for an artist’s portfolio or a site for an e-commerce company.

Part of what makes the company an interesting subject was their continued bootstrapping approach, with the company existing for their first 6 years without any kind of investment before raising $39 million in 2010. It is something that many startups could look to as inspiration, especially if they are already driving revenue. In an interview with Inc. Squarespace founder and CEO Anthony Casalena said of this:

‘I attempt to operate to cash-flow breakeven. My mindset is to make spending decisions from a position of pain. I don't say, "I think we are going to be able to hire 200 people this year. There is no evidence for that, but let's just get this really big office and hope that it will be filled up." We are a lot more analytical than that. I try to be realistic about growth projections and react to those in real time. Over the years, we've just kept asking, "What can we do with this money to grow the business?" That's how it's always operated.’

However, when the company did eventually decide to cash it, it wasn’t with the idea of selling off the company to allow Anthony to retire and exit the business, it was instead a cunning business decision. Anthony spoke about this decision in the same Inc. article and said:

‘For Squarespace, it was a number of things. One, it was balance-sheet enhancing. We needed that money as a buffer, and to get loans against. Two, I don't come from a wealthy background, and I was able to sell some shares and separate my personal well-being from the well-being of the business. The other driver was I wanted to bring on better executives. To provide some corporate structure and get a stamp from great investors would really show people that this was an exciting place to work.’

It is this bootstrapping that makes Squarespace such an interesting company from a startup perspective, simply because it is a conundrum that many companies have in their first few years. For many companies, when offers come in for either an acquisition or shares, they are in a healthy place, after all no company will want to buy or invest in a failing organization. It means that often these deals come down to either a need/want for the founder to cash out or get a lump payment, or to get additional capital to expand quicker.

Anthony decided that these weren’t necessary for several years until the company has grown organically. In fact, one of the key tenets of the organization was to constantly break even, meaning that even credit was largely avoided. In fact the only real loan of note was $30,000 borrowed from his father to buy the two servers the company needed to get started.

Thanks to the innovative business model that Anthony had pushed, it was possible for the company to do this, where others have been forced to take additional investment to either make some money for themselves personally or to quickly build company infrastructure. It is clearly much more difficult than giving up a bit of control for capital, but with the results that Squarespace has seen and the vision they have managed to continue, it is clear that it is one that has more than paid off. 

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