The Mega-Trend in Business Websites
In the early days of the internet … we’re talking about the late 1990s … website technology
was all about silos. Companies wanted to trap you in to buying all your products and
services from a single company. Then, about fifteen years ago, things changed dramatically.
Website development became more about the "open web" where small businesses
with each other by exposing ways for different sites and services to talk to each other (the
technical term is APIs). This made it easier for businesses to buy their website technology
from one vendor and their email from another while integrating their marketing tools from a
third. And all of this could be hosting in one place or in several places.
But over the last few years, things have started to change.
As all those small technology businesses got bigger, gaining additional growth became harder
and customer data became more valuable. So companies that had previously integrated with
each other to foster growth in their core businesses started to envy each other’s business —
and revenue. A really good example of all this is the big shake up a few years ago where
eCommerce giant Shopify and European website-builder Wix tried to use their market clout to
force MailChimp to share customer data with them. MailChimp refused, so the two bigger
companies de-platformed MailChimp. Now MailChimp is entering the website business and both
Shopify and Wix are trying to get into the email business.
This is happening all across the internet. Big tech companies want to get bigger and small
tech companies are either preparing to get acquired or making deals to protect themselves
from new competition from former partners.
What Squarespace Is Doing?
We have a lot of customers on Squarespace — after DNN, it’s the second most popular website
technology for our customers. Squarespace is in a unique position. They are not "small,"
but they are not a giant either. Smaller companies get acquired easily. Bigger companies
have market power and access to capital. So, what should Squarespace do?
We got a piece of the answer to that question just about two months ago when Squarespace
acquired Tock — a Chicago-based technology company that provides online reservations
technology for restaurants. We have made websites for a lot of restaurants in the Bay Area
and a smoother integration between these two technologies will certainly influence our
platform recommendations for customers going forward.
The point here is that Squarespace’s strategy to remain competitive with the industry
giants appears to be to acquire for growth and to pursue business niches — like restaurants
and other reservation/appointment-based small businesses.
Why Squarespace Is Going Public
A lot of companies get listed on the stock exchange (go public) because they either need
money to expand or investors want to cash out. Neither is the case here — they did upwards
of $600 million in revenue in 2020 with a healthy operating cash flow of $150 million and
they are growing at 28% year-over-year.
We don’t have any inside information, but when you look at what Squarespace is actually
doing, in this case it looks like Squarespace has filed with the SEC to go public to use
company shares to make more acquisitions like they just did with Tock. This is also why
they are not doing an IPO (Initial Public Offering) — they just do not need the money. This
will be a direct listing under the ticker symbol "SQSP" (in social media you’ll
see the $SQSP hashtag) so owners of shares can trade them freely on the market which
makes them more attractive to business owners who would receive shares.
It will help get more deals done.
What This Means for the Future of Squarespace
If you are a small business with a Squarespace website you’ll likely notice no change.
Over the next year or so you will likely see additional acquisitions and partnerships to
make more services available to you as an existing customer. If you are considering using
Squarespace for your website in the future, the stock listing and additional acquisitions
will make Squarespace more competitive with the larger players in this space — Wix, Weebly,
Shopify, etc. And competition makes everything better.
Is Squarespace the Right Website Solution for My Business?
We get asked questions like this a lot. The answer is, "It depends." If you’d
like to learn more about Squarespace and whether it’s the right website solution for your
business — or whether you should be using DNN or another application — we’d be happy to
lay out all the options with you. Reach out here. Just contact us
and we'll help you through the evaluation process.
If you want to learn more about Squarespace, DNN, or our services at Upendo Ventures, you
can ask a question or schedule a call with us.
If you want more information about the Squarespace public offering, you can
read about the Squarespace IPO on TechCrunch.
If you are a bit nerdy like us, you can also view Squarespace’s actual SEC filing for yourself.