Squarespace Case Study Personal Use Ebook

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Anthony Casalena started the company in 2003.

The company is private and is not required to publish information about its financial position. According to a 2016 Entrepreneur article about the company, it stated the company made $100 million in 2015. [Source: https://www.entrepreneur.com/article/274486]

If you consider that the company has at least one million customers, and all those customers subscribed at the base rate of $12, the company is easily earning $12 million per month, which equates to $144 million per year. It’s likely many customers are using the higher-priced tiers, so this $144 million is a conservative estimate by all measures.

How the Company Started

Casalena started the company as part of a college incubator program. He wanted to create hosting and a web development tool that he could use to create websites. As part of the incubator program, he signed on several beta testers and gave them access to the system for a discounted price.

His reason for choosing this type of business was the lack of tools available to blog back in 2003. He felt the tools that did exist weren’t easy to use and you had to use different websites for different aspects of the job. He wanted a complete set of tools that he could use for his development use.

Casalena’s father lent $30,000 to get started with the project. Because it was part of the incubator program, the college allowed him to build the business using school resources, as that is the point of an incubator program. By the time Casalena graduated, the company was making millions of dollars and attracted the interest of several venture capital firms.

Initial Problems

The company received negative press by allowing hate groups to use the Squarespace service. It has since removed those groups and created a policy to disallow any groups of this nature.

WordPress started the same year Squarespace did. At the time, the market for bloggers was still in its infancy. The tools were hashing out the best ways for average bloggers without tech skills to create and maintain a blog. WordPress eventually became quite popular to the point of being the de facto standard among software of it’s kind. However, Squarespace and WordPress are not quite the same. The WordPress standalone software gives its users free reign on how they want to set up their websites. Of course, that requires more knowledge than drag-and-drop. Developers started developing themes and plugins which helped the platform accelerate into the stratosphere. This is something that is still prevalent today.

Squarespace does not offer a free plan, and it doesn’t seem like that is ever going to be an option. The company’s major two competitors, Wix and Weebly, both offer a free tier on their subscription plans. This is likely to attract more users initially. It should be noted, however, that Squarespace’s features are more robust than both its major competitors.

Why it Works

The beta program Casalena set up while at school was quite successful. By the time he graduated in 2017, venture capitalists were interested in advancing the company. He obtained capital easily.

The concept of Squarespace breaks away from having to code modules for websites. It uses a drag-and-drop component mechanism. This makes it easy for others who are not technically savvy to create websites. While other tools now exist, he was an early adopter of the concept. As such, he has been able to transform the company into what it is using several years of experience.

Squarespace saves people time. That is the appeal of the service. When you compare to other services like WordPress where you have to look for themes and plugins and hope they work, Squarespace gives you out-of-the-box functionality. While it’s true that is less customizable than the WordPress route, few nontechnical people will be upset with this. With Squarespace, bloggers can concentrate on blogging and eCommerce owners can concentrate on selling.

The monthly price is reasonable, which will keep people interested in subscribing. At the time of this writing, users could subscribe for $12/month for a personal account. Businesses could subscribe for $18/month. The eCommerce options cost more, and there are transaction costs for the payment processor. But, that is standard in the field, i.e., the payment processors would charge the same irrespective of the selling platform.

Promotion:

During his college days, Casalena was responsible for marketing his service. He used the free offers from Google Adwords ($100 credits) and was able to build up a customer base. The business model is subscription-based which means recurring income. A subscription in a service such as Squarespace usually has low switching costs due to the amount of time and resources invested by the users. It was not easy for non-technical people to transfer websites. It was easier to continue using something that works and did what they needed.

It’s likely that the company received positive attention when they received venture capital. When that information hits the wires, it gives the company credibility. Bloggers and developers were likely thinking that if venture capitalists were willing to give the company money, it is a worthy service for them to use.

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