Below is an edited transcript for an interview with a former executive at Squarespace. The interview touches upon Squarespace's valuation proposition, customer segmentation, growth opportunities, risks & challenges, acquisition philosophy, and more. Headings are added to improve readability.
ARPU: First question, how would you describe Squarespace’s products?
Product Evolution of Squarespace
Former Executive: Right, it has evolved a lot over time. It started off as a website and hosting business, and obviously also sold domain names. So, that was kind of the basic business -- you buying a website and building your web presence and also purchasing a domain. Then they added an integration partnership with Google, selling G Suite as an add-on to your Squarespace website. And then they also launched Commerce which was your ability to create online store on Squarespace. So when Squarespace started in 2004 it was really just a website and hosting platform then they added almost 10 years later domain, G Suite, online store.
Then around 2020, that’s when they really expanded their portfolio to marketing, with their proprietary email marketing tool and the social story through the acquisition of Unfold, and then also expanded their commerce offering through the acquisition of Acuity going into scheduling and also their point-of-sale solution, which back then was not in partnership of Square. Since then they have expanded further with acquisition in the reservation space.
That’s really how the business has evolved. Now it’s an all-in-one solution for anyone wanting to build their business online and needing a website and online store to do that. Not just their business, but I would say there’s also a lot of private usage around your portfolio, your wedding website, whatever that might be.
What do you think is the most critical problem that the customers are paying Squarespace to solve? Is it online presence in your opinion?
The emergence of Instagram presents a threat
Yes I think the domain is kind of a basic and oftentimes people can acquire that elsewhere and not necessarily on Squarespace. The biggest problem Squarespace solves, and especially in today’s time, is you need an online presence. You have many alternatives and growing it with Instagram, allowing you to build an entire store. I would say Instagram is a threat on the commerce side but it is really about helping you build a presence online, and Squarespace specifically allows you to build an incredibly professional looking presence online because they are really focused on high-quality designs and making your website look as if it were built by a high-quality designer even though you did it yourself. So that’s what they really focus on, giving you a really professional looking website to help you reach your audience online.
Perhaps you answered this question already but what do you think is the most common and shared characteristic of the customer base?
Squarespace selling point: aesthetics and design
On the commerce side, it’s more straightforward. The main target group for Squarespace is SMBs. So not necessarily the big commerce stores quite yet, but more on the SMB side where people are just starting out and building their presence online to do so. Then on the pure website side, the main focus is on people who care about aesthetics and the design. Squarespace doesn’t go after the low-cost, price-conscious consumers, those I would argue would rather go to someone like GoDaddy or Wix which has much lower price tier and also a free tier which is important because Squarespace does not do that. So they don’t have a free tier. They go after consumers who are not as price-conscious and appreciate high-quality high-aesthetic products. I would say that’s kind of the common denominator of who they are going after.
Understood. What do you think is the company’s philosophy in solving these problems we just discussed? Is it more design-oriented or is it more efficiency-oriented?
The push to become an all-in-one solution
They are definitely pushing towards an all-in-one solution. So making it easy for you to have everything in one place on Squarespace. That started by launching Squarespace Extensions, which basically give you access to any type of feature you need through a third party if Squarespace doesn’t develop it themselves. Squarespace is also invested in adding all these add-ons around email marketing, social stories, point-of-sale, restaurant reservation, and allowing you to have an all-in-one solution so you can stay within their ecosystem and you don’t reach to other platforms. So they are trying to make it easy for you in terms of getting everything you need and also making sure the website building process is as intuitive as possible. And for someone who doesn’t want to build the website himself, that’s where either Squarespace Select, which is their enterprise product, comes in, or Circle this designer community which is basically people that design websites for you if you don’t want to do it yourself but don’t want to hire big agencies.
Moving on to competition, who do you think is the primary competitor of Squarespace, and can you elaborate why?
A crowded field of competitors
I look at it in 2 different ways. On the commerce side, it’s very easy, it’s Shopify. They are incredibly well-established in the space. There are also new alternatives commerce solutions coming up, like what I mentioned earlier, Instagram allowing you to set up your own store or Facebook allowing you to sell on their platform. So we are seeing more integrated solutions on already existing platforms being added to the commerce space.